Welcome to San Francisco. Would You Like to Make a Deposit?

A groundswell of interest in public banking has advocates pondering how city-owned banks could transform the way municipalities collect and spend their money.

STORY BY Oscar Perry Abello

PUBLISHED ON Feb 19, 2018 (nextcity.org)

It’s no surprise that Malia Cohen worries about what local public dollars are doing. As a member of the San Francisco Board of Supervisors, the municipal legislative body, it’s her job to know how, where and why the city’s money is coming in and going out. But recently, Cohen has joined a growing number of public officials around the country who are wondering what happens in between — what happens when the money in the city coffers goes to sleep at night.

In fiscal year 2017, the city of San Francisco took in an average of $508 million a month in revenues and put out $467 million a month in expenses. But in between, the banks that handle all that cash sometimes used public dollars in ways that, in the opinions of Cohen and others, contradict the reasons why that money is coming and going in the first place.

“The existing banking and financial structures we’re operating in don’t always mirror our city’s values,” Cohen says. “For example, we had many people opposing the Dakota Access Pipeline. Many of the banks we bank with support the funding of this pipeline.”

For some cities, like Philadelphia, Chicago, Seattle and elsewhere, the Wells Fargo fake accounts scandal was the last straw. The bank’s subsequent downgrade on its federal community reinvestment rating even forced New York, the nation’s largest city, to initiate the process of moving its deposits and banking servicesaway from Wells Fargo.

But where else could all those dollars be kept other than in a large, private financial institution? State and local governments hold around $458 billion in deposits, according to the Federal Reserve Bank of St. Louis, while state and local pensions hold $3.7 trillion in investments. That’s a lot of money and a lot of daily transactions, which would overwhelm most community banks in most cities. For a solution, Cohen and others have turned to what seems like an unlikely place for big city legislators: the windswept plains of North Dakota. The state is home to the the Bank of North Dakota, the nation’s only public bank, a government-owned deposit-taking institution.

As Cohen and others see it, modeling a city-owned bank after the Bank of North Dakota would go beyond protecting public dollars from being used in ways that contradict public values and priorities — it could also help utilize those dollars as a powerful tool to advance those values and priorities. There are huge risks that need to be addressed and big questions to resolve along the way, but the urgency and energy around the public bank idea have never been stronger or more widespread, with public bank proposals at various stages in San Francisco, Oakland, Seattle, Los Angeles, Santa Fe, Washington D.C. and Philadelphia.

Several states, most notably New Jersey and Michigan, are also moving public bank proposals forward. New Jersey Governor Phil Murphy, new to office and himself a former Goldman Sachs investment banker, campaigned on creating a public bank.

“We would have more autonomy and more say in how our city resources are invested. San Francisco is one of the hottest real estate markets in the world but we’ve got an affordability crisis. Why are we not investing our dollars to solve that?” asks Cohen, who first heard about public banks during her 2010 campaign for office, when an opponent brought it up first. “What I’m also envisioning is how a municipal bank could better support small businesses, financing small businesses run by minorities, women, veterans — those who don’t have access to the same level of capital.”


Predominantly rural North Dakota may seem an unlikely place for cities to look for a solution, but there are some clear parallels between the Bank of North Dakota’s origins and the circumstances facing cities today. When the bank was founded in 1919, North Dakota farmers had been frustrated with the lending terms given to them by banks based in Minneapolis and Chicago, which they felt were too onerous and even predatory.

In today’s San Francisco, Cohen sees affordable housing developers struggling to access loans at affordable interest rates that would allow them to build or preserve more affordable housing, and at deeper levels of affordability. She also sees small businesses — both startups and well-established enterprises — struggling to get access to non-predatory credit that would enable them to grow and hire more employees.

At the California Reinvestment Coalition, the state’s leading financial watchdog group, executive director Paulina Gonzalez spends her days battling big banks, but she has similar hopes for a public bank.

“There’s an opportunity for cities,” Gonzalez says. “Maybe a public bank can provide support to local small businesses at lower interest rates, or provide support for affordable housing in a way that responds to community needs.”

With a budget appropriation for startup capital of $2 million, the equivalent of $28 million in today’s dollars adjusted for inflation, the North Dakota state legislature created the Bank of North Dakota, which opened its doors on July 28, 1919. How to raise startup capital is one of the big questions facing public bank advocates today. Banking startups can choose whether to be state-chartered (like the Bank of North Dakota) or federally-chartered; either way, regulators want to see a certain amount of startup capital based on the projected startup size of the bank.

“If the bank takes on deposits, we must be certain we can adequately fund the reserves necessary so that we can show we’re a responsible lender, modeling good behavior,” says Cohen, who also happens to be a trustee of one of the city’s pension funds.

Regulators will also want to see a business plan.

From its very beginning, the Bank of North Dakota’s business plan was not to compete directly with private banks and credit unions, but rather to complement them. Its primary source of deposits is not individuals or businesses, but the state’s tax payments, fees and pension funds, as well as deposits from city and county government entities in North Dakota. Today’s public bank advocates have to consider whether a new public bank, starting a hundred years after North Dakota’s, can feasibly take over all revenue streams at once or whether it should carve out public revenues and deposits one slice at a time to gradually grow the public bank.

As part of its non-compete model, the Bank of North Dakota doesn’t have branch offices and doesn’t offer ATM cards, debit cards, credit cards or online bill pay. If individuals or businesses want to open an account, or make a deposit or withdrawal, they have to come to the bank’s headquarters in Bismarck. Only North Dakota residents and businesses may open a checking or savings account, or purchase a certificate of deposit at the Bank of North Dakota.

Despite what seems like a limited business model, the Bank of North Dakota currently has around $4.9 billion in deposits and $7.3 billion in assets — including $4.8 billion in loans. The bank earned a record $136 million in net income in 2016, and hasn’t posted a net income loss going back to at least 1971, according to the bank’s 2016 annual report. Over the past few decades, the bank typically paid between $30 to $50 million a year back into the state’s general budget — something that could be a huge boost to chronically underfunded city governments.

Based on population size — approximately 758,000 in North Dakota and 865,000 in San Francisco — a San Francisco public bank could eventually be as large and financially profitable as North Dakota’s, if not more so, given the city’s overall wealthier population and higher property values.

In its lending strategy, the Bank of North Dakota also seeks ways to complement private banks instead of competing with them. It does so mainly by serving as a sort of banker’s bank in a couple of different ways.

Business loans make up around 40 percent of the Bank of North Dakota’s lending portfolio and about half of those loans are so-called participation loans. Much of the bank’s farm loans are also participation loans. In a participation loan, a client comes to a private bank asking for a loan that turns out to be bigger than what the bank is able to provide at the time of the request. Banking regulators don’t like to see banks be “overexposed” to any one client — that’s putting too many loan eggs into one client’s basket. In North Dakota, when faced with this situation, the private bank can approve a loan to cover part of the client’s request, then it can ask to the Bank of North Dakota to make a loan covering the rest.

With the participation loan model, the business or farmer is less likely to seek capital and services from a larger, perhaps national bank. Thanks to the Bank of North Dakota, local North Dakota banks are better positioned to keep relationships with clients as their businesses grow, which most likely keeps those businesses’ deposits local while still providing them access to all the capital they need.

The Bank of North Dakota also makes direct investments into local banks—it currently holds around $249 million in local bank stock shares, helping to meet a crucial need for smaller banks, which often have a tougher time raising the level of capital required by federal regulators to remain in operation.

It’s largely because of the Bank of North Dakota’s participation loans and local bank investments that North Dakota has more banks and credit unions per capital than any other state, says Stacy Mitchell, co-director of the think tank Institute for Local Self-Reliance.

“It’s fascinating to me because it’s a public solution that creates a much more robust cadre of capitalist enterprises,” Mitchell says. “In terms of the functionality, I don’t see a particular reason this model wouldn’t adapt to an urban environment.”

There are some parts of the Bank of North Dakota model that Mitchell doesn’t think would transfer to a more politically tumultuous, big-city environment. For example, while the Bank of North Dakota is staffed with professional bankers with backgrounds and experience in running private banks and underwriting loans, its board consists of only three people, one of whom is the Governor of North Dakota. The other two are the state’s Attorney General and the head of the Department of Agriculture, who the governor appoints.

“It’s a very small board, and it has worked in favor of North Dakota, which has a fairly high level of integrity in its government,” Mitchell says. “It’s a small place and it seems to have worked out fine, but I look at the structure and it doesn’t seem robust enough.”

For San Francisco and other places, governance is a huge question. In a place like New Jersey, it’s concerning to an almost comic degree, with “Bridgegate” being just the latest highly visible example of what lengths politicians are willing to go to spite each other.

“You have to very carefully circumscribe what the bank is allowed to do and who is on the board,” says Ellen Hodgson Brown, founder and chair of the Public Banking Institute, a nonprofit supporting public banking advocates around the country. “You don’t want politicians deciding who gets the loans.”

The banker’s bank model can help insulate a public bank from getting too involved with politics, according to Hodgson Brown. “Let the local banks deal directly with the customers,” she says.


Cities don’t have to go to North Dakota to see if it’s possible for a public sector entity to make loans while keeping politicians at arms’ length.

Local and state housing finance agencies everywhere already issue tax-exempt bonds to finance affordable housing projects, carefully underwriting the projects and developers who must eventually pay back those funds to investors. Housing finance agencies can’t play around with politics because they need to be able to keep up their low risk ratings or else lose the interest of the Wall Street types that invest in their bonds on behalf of future retirees, pensioners and others.

Depending on the city, the local community development agency may also be underwriting loans on a regular basis. The San Francisco Mayor’s Office of Housing and Community Development technically has a $1.4 billion affordable housing loan portfolio, for which it evaluates the finances of developers and the projects they propose, scrutinizing construction cost estimates and other project documents for possible fraud and other concerns. It doesn’t always work perfectly, but they underwrite loans on a regular basis without politicians getting involved in the day-to-day transactions.

Getting away with poor cost estimates in affordable housing finance in San Francisco would be hard, says Rebecca Foster, executive director of the San Francisco Housing Accelerator Fund, because the Mayor’s Office of Housing and Community Development (MOHCD) has a lot of layers of review built into their systems and loan documents. The Fund works closely with MOHCD’s underwriting, construction oversight and loan administration teams, and for rehab and new construction loans, the city’s construction manager as well as the developer’s construction manager both must review and sign off on a construction contract. In its loan agreements, the city limits administrative and overhead costs and requires that these costs are clearly line-itemed.

“If governments like the city or even the state could figure out more effectively how to link the investments of some of their deposits, even a very small portion … to local activities they support, that could be incredibly powerful,” Foster says.

On a smaller scale, San Francisco also offers down payment assistance loans to first-time, low-to-moderate income homebuyers. It currently has around 1,200 such loans outstanding in its portfolio, worth around $82 million. It also has a revolving loan fund for small business loans, currently administered by a nonprofit.

“The public bank would be able to enhance what we’re already doing,” Cohen says. “For example, our down payment assistance program has some limitations, and this could help it become more robust.”

In New Jersey, public banking advocacy efforts have been coordinated by environmentalists Walt McRee and Joan Bartl, both also working under the banner of the Public Banking Institute. They met future gubernatorial candidate Phil Murphy at a picnic of the Princeton Community Democratic Organization before he announced his run. “Because it’s what we talk about, we asked if he had heard about it,” McRee says.

San Francisco Supervisor Malia Cohen, seen here in a 2016 photo, is one of a growing number of city officials examining how public banks can benefit local governments. (AP Photo/Jeff Chiu)

Not only had Murphy already heard about the Bank of North Dakota, but as a former U.S. Ambassador to Germany, he had learned about that country’s network of local public banks, which have been around for hundreds of years.

Since then, McRee and Bartl have been touring the state, talking with anyone who is interested in speaking with them, from various labor groups to professional networks to mayors and local council members. They’ve been hoping to prime allies in anticipation of huge push back from the banking lobby if Murphy moves forward with his campaign promises around public banking. “The status quo has a momentum,” McRee adds.

Their efforts are already paying off. Last month, Murphy’s allies in the New Jersey legislature introduced a bill defining the scope of a public bank and establishing a process to establish a board of directors for a public bank.


Last year, Cohen and her colleague Sandra Fewer requested an analysis on “community responsive banking” with a focus on creating a municipal bank from the city’s Budget & Legislative Analyst’s Office. A key step in moving the public banking process forward, the analysis includes a re-assessment by city attorneys that the city does have the legal authority to charter a banking entity, which contradicts earlier city attorney findings from 2011.

“The key thing I took away from the report was this is doable,” Cohen says. “There’s a lot of moving parts in our financial banking and payroll system, but San Francisco has a lot of talent, and the legal framework already exists.”

It would also be cheaper than what the city is already doing. The community responsive banking analysis notes that the city pays $864,000 a year in fees just for short-term cash management accounts. The city has nearly 200 short-term cash management accounts, one each at Union Bank and U.S. Bank, and the rest with Bank of America, with an average account balance of around $223 million. Meanwhile, Citibank manages the city’s $8.3 billion in longer-term investments for an annual fee of $186,000, in addition to any broker and dealer fees for trading in stocks, bonds and other investments.

Thanks to the interest that the Bank of North Dakota earns on its lending and other assets, the state of North Dakota pays nothing for the same services — in fact, the bank more often pays the state in those chunks of $30 to $50 million a year, if it’s needed.

The Office of San Francisco Treasurer José Cisneros just launched the next phase of the public bank formation process, announcing the members of a Municipal Bank Feasibility Task Force.

“It’s my goal to have a thoughtful directive from the task force by the summertime, so we can move forward in the fall to introduce legislation to get this incorporated by the end of this year,” Cohen says.

The 15 members include representatives from community banking, a credit union, the San Francisco Chamber of Commerce, the California State Treasurer’s Office, the head of the Mayor’s Office of Housing and Community Development, and Gonzalez.

“Our history is in the reinvestment work, looking at banks across the country,” says Gonzalez. “In this case, it’s about tax dollars. There’s a real interest in cities and states to think about what can they do to ensure that there’s a banking model in place that is as able to reinvest tax dollars back into communities.”

At the same time, Gonzalez’s work battling the big banks is a reminder that, no matter how much of a difference a public bank might make, there’s a much bigger picture: the nearly $12 trillion in deposits held at all commercial banks. A sudden smattering of new public banks across the country isn’t going to suddenly stop big banks from using those deposits to finance and profit from projects that don’t live up to the values of all the millions of people to whom those deposits belong.

“We have to get the banking system and all the individual actors in it to hew to our standards as depositors, municipalities, companies and nonprofits because it will be very hard to overwhelm what that massive-scale system is doing with anything else,” says Kat Taylor, co-founder of Oakland-based Beneficial State Bank and fellow task force member.

That said, Taylor, whose husband and fellow co-founder is Trump impeachment campaigner Tom Steyer, has a lot of appreciation for the sentiment and energy behind public bank initiatives around the country. In her view, because of the privileges the public bestows on the banking system, such as federal deposit insurance, banks are essentially quasi-public institutions and should operate as such. But for many reasons, most of us forget that or never even get to understand why that is.

This sudden wave of public bank legislation and activity is a sign to Taylor that many are starting to remember.

“I think this is the sign of the sleeping giant, the American populace, taking back their agency and accountability for the banking system,” Taylor says. “It belongs to all of us.

Berkeley occupation updates

February 21, 2018

This showed up in my email. Thank you, whomever transcribed it.

Transcription of Brian Edward-Tiekert on KPFA, 2/12/18, 7:27 am

…. a move by the City of Berkeley to dislodge homeless encampments from the grounds around Old City Hall. Possibly of much larger significance because Berkeley is currently the target of a federal lawsuit over its repeated evictions of homeless encampments, how the judge will feel about a short notice eviction – this was done on 24 hours – we may find out in the near future.

I was super-curious because I went out there to watch the eviction and there were a lot of city staff and a lot of police there. You know, what’s the price tag on evicting homeless camps, cleaning up after them, and then doing it again, wherever the people have moved to. And in fact, people were kind of moved on by police, people who’d been camping at city hall, people from two other locations they moved to that day.

I followed some people to basically a gravel lot where there used to be a rail right of way close to Berkeley Bowl West, and they had already been threatened with arrest by a Berkeley police officer who came by mid-afternoon. They were picking up their things and moving again in the dark, kind of panicked, they didn’t have flashlights, although some good Samaritans were bringing cars by to help them pack up and move out to the marina.

Friday [I] went to talk to some people who had moved their things next to the new city hall, the Berkeley Civic Center, and started to set up a couple tents and a banner. They slept there one night and police came by and gave them a written formal notice that they’d have to clear out. It was basically copied word for word except the address from the one that had been given the people at Old City Hall. They weren’t sure where they were gong to go, but they were also packing up in a rush as dark was closing in.

So Karin Smith, who was covering this for our news department and I, we put in a couple repeated requests to the City Manager’s office, the city spokesperson Mattai Chakko, you know, asking how much this costs. He said we don’t know, “we won’t be able to calculate the cost of evicting the homeless camps, at least until timecard data is in,” which I thought was interesting because given the number of people I saw out there you would think someone would have at least penciled out a number, you know, what’s this going to cost?

How does it compare to setting up extra shelter beds for everybody? Giving everybody a hotel room for a couple nights? But apparently the city doesn’t calculate things that way. We said, well can you tell us how many people were involved, give us a head count, so we can get a sense? Eventually at the end of the day, this is what he [Mattai] came back with, and he’s including the efforts that were done the day before the camp was evicted to reach out to the people in the encampment, to inform them they were risking arrest if they stayed and to put them in contact with city services. 20 civilian staff, 30 sworn officers, I was trying to figure out, what does this cost. I called Andrea Prichett, who’s on the Berkeley Police Commission and knows a lot of the police on sight, how many high ranking officers were there. She said, “well I counted three lieutenants” and she named them, so I believe her. The spokesperson I talked to, a sergeant, that’s right below a lieutenant, and I saw at least one other sergeant on site. A lieutenant of middling seniority, I looked up the figures, they’re public, cost the city in pay and benefits, nearly $190 an hour, a sergeant costs nearly $160 an hour, and a regular officer costs nearly $130,000 [sic] an hour.

So to plug in the numbers, on average people were putting 4 hours, and nobody was making overtime, which is highly unlikely, at 5:00 am you had that many cops involved and nobody was ringing up time and a half, I get a figure in the vicinity of $15,000 to $20,000 dollars that the city’s laying out. And I think the big question that our cities haven’t grappled with the explosion of homeless encampments, not what’s the cost of housing people, but what’s the cost of policing people, like what are we spending dealing with homelessness as a police issue?

–Mike Zint

And another note from Mike Zint dated February 21, 2018:

I just got this. When it comes to cool things, this one is up there in ranking.

Mike: Several weeks ago–actually perhaps even a month ago–HUFF (Homeless United for Friendship & Freedom) passed the following Resolution. Perhaps you could pass it on to the FTCFTH folks? Hope all going well. Can you confirm you’ve gotten this e-mail? –Robert

HUFF supports the struggles of the Berkeley intentional community–which has various called itself First They Came for the Homeless, Here…There, Snub the Hub, and the Poverty Tour. They have repeatedly overcome government deportation and property seizure. They have reestablished themselves as a viable campground and provided emergency shelter to its participants over the last 15 months. They have effectively formed alliances and used legal tools to challenge those who would sweep them away without a trace. Their example and their presence has pressured unwilling “progressives” to drawback their attacks on other Berkeley encampments. We commend their struggle for the right to be free from property seizure and harassment, to create their own shelter and community, and by their existence to educate the broader California community regarding the false promises of authorities and the real power of those outside to form independent bonds with the community if free from criminalization.



SAN FRANCISCO – (aifisf.comMichael Smith, the Relocation-era Sioux man who founded the American Indian Film Institute and the American Indian Film Festival, passed away on Wed., Feb. 14, 2018 in San Francisco. He was 66.
Growing up watching non-Natives play Natives, perpetuating stereotypes and disseminating inaccurate, often offensive portrayals of American Indians onscreen, a 20-something Smith started the American Indian Film Institute in 1975, in Seattle. It took zero persuasion on Smith’s part to recruit two of his heroes – Mvskokee actor Will Sampson (“One Flew Over the Cuckoo’s Nest”), and Canada’s Coast Salish actor and tribal leader, Chief Dan George (“The Outlaw Josey Wales;) “Little Big Man”) – to become founding board members of AIFI. A couple of years later, Smith helmed the first-ever American Indian Film Festival; and, in November 2017, AIFF marked its 42nd year of creating countless filmmakers, screening hundreds of films by, for and about Native peoples, and shattering stereotypes around the globe.
In marking its milestone 40 years, the American Indian Film Festival naturally reflects on the themes, forces and faces who inspired new generations, broke through barriers and set the bar for cinematic achievement, against the dramatic backdrop of civil and American Indian rights, a cultural revolution, and cutting-edge films. Will Sampson (One Flew Over the Cuckoo’s Nest; Buffalo Bill) , and Coastal Salish actor Chief Dan George (The Outlaw Josey Wales; Little Big Man) broke into mainstream feature films, forging their future as icons, and inspiring a young Sioux visionary to establish a forum and showcase from an indigenous perspective. From relocated urban Indians to rural reservations storytellers, new filmmakers from all corners of Indian country stepped up and spoke up, made movies, and shared them with the American Indian Film Festival.
“Both Chief Dan George and Will Sampson were my heroes, and ultimately became founding board members of the American Indian Film Institute,” Smith said in 2015, as AIFF marked its 40th anniversary. “Seeing these formidable, funny Indian actors onscreen illuminated the void of authentic portrayals, complex characters, and three-dimensional Native life, in the movies. They were unforgettable presences in my life, and at the festival. The American Indian Film Festival gave us a voice, 40 years has flown by, and we’re looking forward to the next 40.”
As tributes pour in for Michael Smith – the visionary Sioux man who changed audiences’ POV of America’s indigenous people and their culture – his family vows to continue his work and honor his legacy.
“The impact of my father’s work, and the American Indian Film Institute’s history will remain immeasurable,” noted Smith’s daughter, Mytia Zavala – who grew up with a second, extended family in the tight-knit community of Native cinema, and has continued in her father’s footsteps. “My Dad would want us to carry on the institute’s vision and mission, and in his honor, we will.”

#   #   #

The Smith/Spencer family is trying to raise funds to help with medical costs, funeral arrangements, and funds to bring his family and remains back to Poplar, MT. where he will be laid to rest. All funds go to his daughter Mytia Zavala who is in charge of the arrangements.

Friends and family are welcome to attend the funeral services for Michael which will be held in Poplar, Montana or join us in celebrating his life in a Memorial Celebration which will be held in San Francisco Bay Area.
The family is currently in the process of arranging the details and will return with an update with dates, locations and time.
Any amount is greatly appreciated and know that any contribution makes a huge difference.
Thank you for your continuous prayers and support.
GoFund Me Campagin

The Crisis At KPFA & The Pacifica Network:  “Making Sausage” Democracy & A National  Alternative Multi-Media Network

Published on Feb 19, 2018

The crisis at KPFA and Pacific including the possibility of bankruptcy was the focus of a forum on 32/18/18 in Berkeley. The forum also looked at the history of efforts to make Pacifica and the stations into an NPR type operation.Also presentations looked at the development of a multi-media platform using streaming video and the digitalization of the analogue channels at KPFA that could bring 2 additional stations for the use of KPFA and possible lease as a way of raising funding.

Finally the program reported on the effort at KPFA to manipulate an election to prevent any representation from the station on the PNB of representatives who would be opposed to the bankruptcy proposal being pushed by the CFO, Save KPFA and United For Community Radio UCR factions.

Speakers at the forum included:
Maria Gilardin, TUC Radio, Former KPFA LSB Member Who Was Banned From The Station
Frank Sterling, KPFA Apprentice Program & Full Circle
Jeff Blankfort, Founder of “Save KPFA” and Host of Host KZYX&Z Takes on The World 90.7, 91.5
Janet Kobren, KPFA LSB and former Pacific National Board Member
Steve Zeltzer, KPFA WorkWeek Radio and KPFA LSB Staff Representative
Pedro Reyes, KPFA Host of Settin The Standard and Late Night Hype
The forum was sponsored by BFUU and WorkWeek Radio.

Production of Labor Video Project

Modern Monetary Systems: Understanding the Mechanics of Money & Value

Modern Monetary Theory: The Evolution of Money and How Modern Money Works

Modern money is a strange thing. To most of us, money appears as something continuously given to landlords and businesses to secure a place to live, food to eat, and all the little parts to make that thing called “a living.” Since a living is made of money-giving, it must be regularly collected — or, to put it another way, money is gathered by people who need to “un-gather” it. For the working majority whose only access to money is to labor under an employer for wages, money is a full-time job and whole lives are revised, re-written, or canceled just to make ends meet, leaving us too little time to ask how a monetary system works — or even what money is.

The Evolution of Money & Currency:
A Brief History of Value, Exchange, Gold, Paper

Somewhere in the mist of prehistory, humans lived with no permanent settlements, agriculture, or industry and each person had identical job-titles as hunter-gatherers. Since everyone produced the same thing, exchange was unnecessary. As farming techniques developed, groups settled to protect and improve the most productive soil. Division of labor occurred gradually as individuals specialized in crafts like pottery and weaving that became recognized as valid professions. As goods increased in diversity, patterns of exchange arose to distribute them more usefully.

Value, Exchange, & Currency

History of Money and Coins, Modern Monetary TheoryTo manage complex arrays of goods, people had to compare quantities, record past exchanges, and invent measures of value to inform group-decisions like whether to raise more sheep or grow more barley. Trade-relations formed and new questions, such as ‘is a bushel of grain as good as a log of salt?’or ‘is a jar of oil equal to two sacks of wool?’ led to establishing ratios of equal value for quantities of differing goods. Over time, goods that gained broad acceptance became used as a medium of exchange or currency. (from the Latin currens, meaning ‘flow or circulation’)

Metal Coinage & the Definition of Money

Cast or engraved to identify weight and purity, metal weights, bars, and rings began to circulate as currencies in the Bronze Age. While grain and livestock were useful, metals held value in relatively small sizes with a basically infinite shelf-life, which made it particularly handy for trading over long-distances. True coins appeared by about 650 B.C., often bearing images of animals, rulers, mythic heroes, or religious symbols.

Roman Coin, History of Coinage and Metal MoneyGrain, cattle, cigarettes, bitcoin — anything can be currency but money must be a unit of account and store of value. Since coins represent equal values, they act as a unit of account — a 10¢ coin is equal to two 5¢ coins because ‘cents’ are identical units. Both scarce and hard to fake, the intrinsic value of coins tend to be fairly stable and thus a store of value. Issued by the mints of states and empires, coinage — from electrum, bronze, or copper to silver and gold — was one of the dominant forms of money for the past few thousand years…

Reserves, Paper, & Fiat Money

Paper money evolved from promissory notes issued by banks for money-deposits that enabled merchants to do business without lugging chests of gold around. Banknotes originally functioned on the same principle as coinage — instead of minting coins for circulation, notes were issued to represent the intrinsic value of metals held in reserves. By the modern era, monetary institutions in most industrialized nations were organized as reserve systems with a central bank authorized by the state to issue the national currency.

Though reserve systems and banknotes had practical advantages over coinage, both of them — paper representing metals and metal money itself — are designed to function on the same basic principle. Modern money, however, is different. Most currencies ditched the gold standard after the US jumped ship in 1971 but these worthless bits of paper, aka ‘fiat money,’ are still pretty good at being money.

But how can this value-less money work?

The State Theory of Money

After observing banknotes’ relation to reserves, Georg Friedrich Knapp proposed that money’s value did not result from any intrinsic value in metals but from the state’s ability to impose taxes. While the idea that money’s value comes from intrinsic value in its material seems to be common sense, it simply never added up to the observable reality and the state theory of money is able to explain why. Metal has intrinsic value on its own, of course — but this value isn’t worth a lot if your taxes must be paid in a different currency and that means the state has the last word about value inside its borders. If the state only accepts taxes in Roman coinage, having tons of gold or Swiss Francs is irrelevant because the options are (A) buy the state’s money, (B) move away, or (C) spark a protracted people’s war to topple the regime so you can change its legal tender.

The power to issue money has pretty much always been an exclusive privilege of the state and coins were frequently produced to fund the armies needed to expand a state’s borders — ‘money is power,’ as they say. Imperialist states routinely banned coins minted in conquered territories and imposed taxes that could only be paid in imperial coin. To Rome, for example, imposing taxes in its territories meant more coin to pay more armies to conquer more people to loot treasuries to mint more coins and gain more territories to tax and so on ad infinitum.

Modern Monetary Systems & MMT

Under today’s capitalist systems, money plays a larger role in human societies than ever but this greater intimacy with money’s form is contradicted by broad uncertainty about its substance and how it works overall. On a daily basis, nearly everyone handles fiat money and, despite knowing it literally has no intrinsic value, it is accepted as if it were gold itself, which it clearly is not. The root of the confusion, however, is not that fiat is treated like gold but that we expect it to behave like gold — but modern money isn’t gold.

And modern monetary systems do not function in the same way that metal trinkets and reserve-backed currencies do.

How Modern Money Works

The first thing to understand is monetary sovereignty — a nation is monetarily sovereign if it has exclusive and unlimited authority to issue its currency. Since fiat money issued by a monetarily sovereign state isn’t fixed to the value of anything else, its government cannot run out of money because it creates money from nothing by spending it into circulation. Full stop. This does not mean the government should spend infinite amounts of its money — but it technically can.

#LearnMMT, Taxes Don't Fund Spending, MMT Modern MoneyJust as modern money is created from nothing by spending it into circulation, money is destroyed through taxation. The ‘taxpayer dollar’ funds nothing — it is deleted from the money supply, nothing more. Taxes do not fund spending because it is impossible for a monetarily sovereign government to need its citizens’ fiat paper to alter numbers in a spreadsheet. Taxation’s most important function is to generate a base-level of demand for the currency by ensuring those who benefit from participating in the nation’s economic production or commerce must also use some of its currency. Since taxation removes currency from circulation, taxation is also a lever to fine-tune inflation.

Why Balancing the Budget Is a Silly Idea

Modern Monetary System Simplified, Spending + Taxation
Note: the + end also includes positive trade balance and private debt, while the – end also includes gov’t debt securities

Spending creates money and taxation destroys it, then spending creates it again. Modern money is like a circuit — money is spent into circulation and taxed back out. A balanced budget means that the amounts entering and exiting are equal. Deficit spending — more money being spent than being taxed — means the non-government, aka the people at large, must gain wealth. A surplus — more money being taxed than spent — means the people at large must lose wealth. If the goal is to create jobs, increase the production of economic value, or develop resources, then a budget surplus is clearly the worst strategy possible and even a balanced budget is unhelpful at best.

Spending deficits are equal to the people’s surplus.

Spending Deficits & Surpluses, MMT Modern Money


If a government issues commodity-money, such as gold coins or notes backed by gold, then an increase in quantity by mint or by print will result debasement or devaluation unless more gold is added. In that case, the government has to either produce or borrow gold or impose new taxes to siphon some money back to its treasury before it can spend without devaluing or debasing it. But modern money — currency issued at a flexible exchange-rate by a monetarily sovereign government — is not the same thing as commodity money. Devaluation happens if a currency’s fixed exchange-rate (its relation to gold or whatever) is lowered by issuing too much of it — but modern money isn’t fixed to gold or anything else.

Spending Modern Money & Inflation

Inflation happens to prices, not money, and it is caused by markets, not by money. Whether the money is gold or paper, if the total that people are spending is more than the total goods and services available to buy, the result is inflation and it happens because demand is greater than what is available. Whatever the currency, spending more money than production can handle will inflate market-prices.


If a government continuously spent money into the system without doing anything else, it would result in inflation because the total economic value in the system is unchanged but with a higher total buying power. One of the cool things about money, however, is that it can convince people to do and make things and it is also able to buy materials and tools that people do and make things with. That means, if idle labor and resources are available, money can be spent without much inflation so long as spending activates that idle labor and resources to add economic value to the society.

In other words, there is no reason to fear deficit spending if that spending employs people who were jobless or provides capital to workers to employ themselves with develop its value because, when money and value are added simultaneously, inflation does not result. Public infrastructure projects, universal healthcare, a workers’ self-managed jobs guarantee, and tuition free public universities — programs like these could be tomorrow’s reality.

Knowledge, Not Money, Is Power

Ancient Model of the CosmosAncient thinkers developed a cosmological model called the Ptolemaic Model — it envisioned earth as the center of a series of nested, interlocking spheres that rotated the sun, stars, and planets across the sky and [spoiler alert] it turned out to be incorrect. Despite being wrong, the model is still a solid way to calculate seasons, motion, speed, and position of planets, and when constellations appear — but new models emerged that did all that and more. Those models took humanity to the moon, not because it was impossible before, but because the old model could not account for its possibility.

The way that we are taught to understand money is rooted in an outdated model that developed when virtually all money was metal and this model cannot account for the reality of money today. Money is not gold. The truth is — and always was — that money is a way to distribute access to the actual value of real goods and services and the material forces and resources used to produce them. The fact that the state accepts taxes in fiat paper and enforces its status as legal tender is enough to establish it as the society’s medium of exchange, despite its intrinsic valuelessness. In fact, this worthlessness is what makes modern money more useful than gold ever was — money can be as abundant as the people need it to be but gold cannot reflect that.

Most of the time, it has been true that ‘money is power’ but no inanimate object has power until people give it power and forget they did. And knowing that takes its power away and returns it to its original treasury, which is where real power is.

In solidarity,
John Laurits


The Fearless Girl statue installed in New York City ahead of March 8, 2017, has became a tourist destination that poses traffic and safety concerns.

Source: Federica Valabrega / Adweek

February 16, 2018 (moc.media)

Fearless Girl stands facing Arturo di Modica’s Charging Bull bronze statue. The sculpture was illegally installed by State Street Global Advisors (SSGA) to celebrate International Women’s Day.

Arturo di Modica’s sculpture was also set up illegally in 1989 after the stock market crash. His work was later recognised as culturally significant and fell under the protection of Visual Artists Rights Act (VARA). The artist wasn’t happy with the Fearless Girl statue. He accused SSGA of commercialising his own work and demanded the removal of the statue and compensation for the damages.

The sculpture became a tourist attraction, posing traffic and safety problems. The New York City Mayor’s Office and SSGA are working to solve the problem either by redesigning the current location or moving both statues to a more pedestrian-friendly site.

“The message of the Fearless Girl statue has resonated with New Yorkers and visitors alike,” Adweek quotes Mayor Bill de Blasio as saying. “Its enthusiastic reception has been heartening, and we are discussing various approaches to ensure this statue continues to be a part of the city’s civic life.”

Fearless Girl gave SSGA $7 million in free marketing after six months. SSGA representatives say 76 out of 476 companies they invest in began to actively work to promote women, Artforum reports. The company’s focus on diverse leadership led to a controversy when SSGA’s parent company, State Street Corp. had to pay $5 million in fines for underpaying female and minority employees in 2010-2011.

First They Came for the Homeless update

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First they came for the homeless

February 16, 2018

In the last 2 weeks, there have been 2 fires, and 1 stabbing having to do with homeless individuals. My fear is these crimes will be used to paint all homeless as unable to care for themselves. There are already many preconceived notions and prejudices in place. Painting the homeless community with broad brush strokes is to blame.

Homeless people are no different than housed. Their being homeless is not because they are less capable, less intelligent, or addicted. It is because they are old, disabled, under paid, and always because they have been left behind economically.

The solution from the government is inadequate. But, that does not stop them from using law and threats of violence or arrest to compel you “into the system.”

FTCFTH has developed a model, and demonstrated that model. We have shown success in spite of the cities efforts to destroy us, through police action and a negative PR campaign. Our model has been structured, and tested by the homeless. It is designed to have what is most needed, while minimizing behaviors associated with crime.

Having a structured community while being homeless drops your odds of being a victim a lot.

–Mike Zint

Every Member of Congress Who Took Money From the NRA and Tweeted ‘Thoughts and Prayers’ to Parkland


On Wednesday, 17 people—the vast majority of them children—were shot and killed at Marjory Stoneman Douglas High School in Parkland, FL. The suspected gunman, Nikolas Cruz, was apprehended by police late Wednesday, leaving America to grapple with yet another horrific act of gun violence.

In the wake of this latest mass murder, lawmakers have once again resorted to the now-cliché gesture of offering “thoughts and prayers” for the victims of the Parkland shooting, while stopping conspicuously short of actually acting on their laughably hollow sentiment. And once again, those lawmakers are the very same people who have gladly pocketed dollar after blood-soaked dollar from the National Rifle Association.

Here are all the lawmakers who have tweeted “thoughts and prayers” with one hand while eagerly cashing NRA checks with the other. Keep in mind that the totals below, provided by the campaign contribution tracking site OpenSecrets.org, represent just the money given directly to that legislator in their most recent campaign. Like most massive special interest groups, the NRA is able to influence politicians well beyond direct donations. For instance, beyond the amounts listed below, Open Secrets reported that the NRA flooded the 2016 election cycle with over $50 million dollars worth of spending in races around the country. Most of that money was spent on ads for or against various candidates.

Marco Rubio (R-FL) – $9,900

Mitch McConnell (R-KY) – $9,900

Rob Portman (R-OH) – $9,900

Joni Ernst (R-IA) – $9,900

Thom Tillis (R-NC) – $9,900

Dean Heller (R-NV) – $9,900

Jim Inhofe (R-OK) – $9,450

John Hoeven (R-ND) – $8,450

Steve Daines (R-MT) – $7,700

Ron Johnson (R-WI) – $7,450

John Boozman (R-AR) – $5,950

Todd Young (R-IN) – $5,950

Mike Rounds (R-SD) – $5,450

James Lankford (R-OK) – $5,000

Bill Cassidy (R-LA) – $4,950

Richard Shelby (R-AL) – $4,950

David Perdue (R-GA) – $4,950

Tim Scott (R-SC) – $4,500

Shelly Moore Capito (R-WV) – $2,500

Ted Cruz (R-TX) – $350

John McCain (R-AZ) – $300


Barbara Comstock (R-VA) – $10,400

Mike Coffman (R-CO) – $9,900

Will Hurt (R-TX) – $9,900

John Katko (R-NY) – $9,900

Bruce Poliquin (R-ME) -$9,900

Lee Zeldin (R-NY) – $9,900

Bob Goodlatte (R-VA) – $7,450

Martha McSally (R-AZ) – $6,500

Bill Schuster (R-PA) – $5,950


Richard Hudson (R-NC) – $4,950

Steve Scalise (R-LA) – $4,950

Lamar Smith (R-TX) – $4,950

Ken Calvert (R-CA) – $4,500

Barry Loudermilk (R-GA) – $4,000

Robert Aderholt (R-AL) – $3,500

Michael McCaul (R-TX) – $3,500

Darin LaHood (R-IL) – $3,000

Erik Paulson (R-MN) – $3,000

Tom Reed (R-NY) – $3,000

Diane Black (R-TN) – $2,500

Marsha Blackburn (R-TN) – $2,500

Carlos Curbelo (R-FL) – $2,500

Rodney Davis (R-IL) $2,500

John Ratcliff (R-TX) – $2,500

Cathy McMorris Rodgers (R-WA) – $2,500

Pete Sessions (R-TX) – $2,500

Roger Williams (R-TX) – $2,500

Mike Bishop (R-MI) – $2,000

Bradley Byrne (R-AL) – $2,000

Buddy Carter (R-GA) – $2,000

Chris Collins (R-NY) – $2,000

Mario Diaz Balart (R-FL) – $2,000

Sean Duffy (R-WI) – $2,000

Chuck Fleischmann (R-TN) – $2,000

Tim Walz (D-MN) – $2,000

Bob Gibbs (R-OH) – $2,000

Paul Gossar (R-AZ) – $2,000

Sam Graves (R-MO) – $2,000

Glenn Grothman (R-WI) $2,000

Vicky Hartzler (R-MO) – $2,000

Jeb Hensarling (R-TX) – $2,000

French Hill (R-AR) – $2,000

Bill Huizenga (R-MI) – $2,000

Darrell Issa (R-CA) – $2,000

Bill Johnson (R-OH) – $2,000

Adam Kinzinger (R-IL) – $2,000

Doug Lamborn (R-CO) – $2,000

Luke Messer (R-IN) – $2,000

Kristi Noem (R-SD) – $2,000

Scott Perry (R-PA) – $2,000

Robert Pittenger (R-NC) – $2,000

Ted Poe (R-TX) – $2,000

Tom Rice (R-SC) – $2,000

Martha Roby (R-AL) – $2,000

Mike Rogers (R-AL) – $2,000

Todd Rokita (R-IN) – $2,000

Peter Roskam (R-IL) – $2,000

Dennis Ross (R-FL) – $2,000

Austin Scott (R-GA) – $2,000

Jason Smith (R-MO) – $2,000

Elise Stefanik (R-NY) – $2,000

Steve Stivers (R-OH) – $2,000

Mark Walker (R-NC) – $2,000

Jackie Walorski (R-IN) – $2,000

Mimi Walters (R-CA) – $2,000

Joe Wilson (R-SC) – $2,000

Rob Wittman (R-VA) – $2,000

Steven Palazzo (R-MS) – $1,750

Mike Kelly (R-PA) – $1,500

Steve Womack (R-AR) – $1,500

Ralph Abraham (R-LA) – $1,000

Lou Barlettea (R-PA) – $1,000

Susan Brooks (R-IN) – $1,000

Warren Davidson (R-OH) – $1,000

Ron DeSantis (R-FL) – $1,000

Louie Gohmert (R-TX) – $1,000

Kenny Marchant (R-TX) – $1,000

Kevin McCarthy (R-CA) – $1,000

David McKinley (R-WV) – $1,000

Dave Reichert (R-WA) – $1,000

Tom Rooney (R-FL) – $1,000

Randy Weber (R-TX) – $1,000

Daniel Webster (R-FL) – $1,000


Rafi Schwartz

News reporter, Splinter. When in doubt he’ll have the soup.

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