As previously announced, on October 4th Keith Helmuth delivered a lecture on Public Banks at St. Thomas University to an enthusiastic audience including students in Prof. McFarland’s class in Community Economic Development.
Keith’s contention is that by establishing its own public bank, New Brunswick could in time reduce its debt and redirect the over $700 million it now spends on interest on that debt, to the services it provides its citizens, such as health and education.
Faced with the mounting deficit New Brunswick’s political parties have favoured one or more of the following approaches:
- raise tax rates,
- introduce new taxes,
- increase fees on government services,
- reduce government expenditures,
- stimulate the growth of the provincial economy in order to increase tax revenue.
None has worked—the deficit and debt keep rising.
For New Brunswickers and their political leaders to pursue the idea of a public bank we need to understand how the banking system works and then get ‘er done. Here are the steps:
- The first step is to understand what money is—not what it does such as serve as “a medium of exchange, a store of value, and a unit of account”, but what it is.
- The next step is to understand how money is created and that it is now created by private banks. So private banks create money—something that central banks once did—and one way of creating money is to lend it out to customers, such as the Province of New Brunswick, and charge interest on the loan.
- Next we need to see that by setting up a public bank, New Brunswick could create and lend money to itself at no interest. It sounds like magic but it has been done in other jurisdictions and is being considered by many more.
- The last step is to convince New Brunswickers that a public bank is both necessary and doable.
The lecture was followed by a lively Q&A including the passing of a Bank of New Brunswick banknote to the speaker—yes, there once was a Bank of New Brunswick. It appears Keith cannot be bought but he did keep the banknote.
