12-Year-Old Girl Explains What Most Economists Can't About Money and Debt

[xchrom]

http://www.alternet.org/story/155700/12-year-old_girl_explains_what_most_economists_can%27t_about_money_and_debt/

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The youtube video of 12 year old Victoria Grant speaking at the Public Banking in America conference last month has gone viral, topping a million views on various websites.

Monetary reform—the contention that governments, not banks, should create and lend a nation’s money—has rarely even made the news, so this is a first. Either the times they are a-changin’, or Victoria managed to frame the message in a way that was so simple and clear that even a child could understand it.

Basically, her message was that banks create money “out of thin air” and lend it to people and governments at interest. If governments borrowed from their own banks, they could keep the interest and save a lot of money for the taxpayers.

She said her own country of Canada actually did this, from 1939 to 1974. During that time, the government’s debt was low and sustainable, and it funded all sorts of remarkable things. Only when the government switched to borrowing privately did it acquire a crippling national debt.

Borrowing privately means selling bonds at market rates of interest (which in Canada quickly shot up to 22%), and the money for these bonds is ultimately created by private banks. For the latter point, Victoria quoted Graham Towers, head of the Bank of Canada for the first twenty years of its history. He said:

'Each and every time a bank makes a loan, new bank credit is created — new deposits — brand new money. Broadly speaking, all new money comes out of a Bank in the form of loans. As loans are debts, then under the present system all money is debt.'

[freshwest]

1. Replacing the utilitarian method of handling anything by the profit motive and it always happens.

If the purpose is to get a job done, it should be done without a parasite in the way to suck the lifeblood of the intentions. If private interests want to gather money for private purposes, fine and well. But stay out of what the public needs to have done, as the private sector will always kill its host. And they've made enough money now to brainwash us into thinking that this is all there is. No, it isn't.

[elzenmahn]

2. I would only make one change to the title of this post...

...it's not that most economists "can't" explain what this amazing 12-year old just did regarding fiat currency...

...it's that they won't.

This should be a shot across the bow to the banking industry and all of the politicians they own, that if a 12-year-old (an amazing one, no doubt) can figure out their scam, then there are many, many more that have it figured out, as well. And their surnames don't have to be Ruppert, Paul, or Keiser, either.

[Baitball Blogger]

3. You go little Canadian girl!

[RC]

4. "Let’s see. The government can borrow money that ultimately comes from private banks,

which admittedly create it out of thin air, and soak the taxpayers for a whopping interest bill;
or it can borrow from its own bank, which also creates the money out of thin air, and avoid the interest.

Even a 12 year old can see how this argument is going to come out."

[RC]

5. The State Bank of North Dakota

The Bank of North Dakota (BND) is a state-owned and -run financial institution based in Bismarck, North Dakota. Under state law the bank is the State of North Dakota doing business as the Bank of North Dakota.
http://en.wikipedia.org/wiki/Bank_of_North_Dakota

How the Nation’s Only State-Owned Bank Became the Envy of Wall Street
The Bank of North Dakota is the only state-owned bank in America—what Republicans might call an idiosyncratic bastion of socialism. It also earned a record profit last year even as its private-sector corollaries lost billions.
http://www.motherjones.com/mojo/2009/03/how-nation%E2%80%99s-only-state-owned-bank-became-envy-wall-street

Bank Of North Dakota: America's Only 'Socialist' Bank Is Thriving During Downturn (VIDEO)
(AP) The Bank of North Dakota - the nation's only state-owned bank - might seem to be a relic.

But now officials in other states are wondering if it is helping North Dakota sail through the national recession.
http://www.huffingtonpost.com/2010/02/16/bank-of-north-dakotasocia_n_463522.html


About First State Bank of North Dakota
The banking crisis of the early 1930s threatened the security of many banks and their customers. By the time Franklin Delano Roosevelt was inaugurated in March 1933, banks in all 48 states had either closed or had placed restrictions on how much money depositors could withdraw. FDR's first act as president was to declare a national "bank holiday" that closed banks for a three-day cooling off period. Solvent banks reopened but many never recovered. During that time and after, throughout The Great Depression, First State Bank of Arthur’s directors and officers made sure all demands were met and depositors never lost any money.
http://www.firststatebanknd.com/template.cfm?page=about

[Odin2005]

6. MMT, so simple even a tween can understand it.

That means a 12yo is smarter than Libertarians.


(MMT - Modern Monetary Theory)

[laconicsax]

7. There are few things that aren't smarter than Libertarians. n/t

[laconicsax]

8. That's because children are exceptionally gifted at recognizing bullshit.