Public banking will allow local communities to thrive economically under certain conditions because it will direct money to local and small-medium businesses. That is, money will not only be invested on real economy, but also on local real economy.
The problem is that the Fed that controls currency flow will never permit municipal banks the privilege of cheap access to national currency (dollar in the US) because this will end the monopoly of the big banking cartels, who actually fully control the Fed.
Nomi Prins worked as a managing director at Goldman-Sachs for 2 years and as a Senior Managing Director at Bear Stearns for 7 years, and was a senior strategist at Lehman Brothers and an analyst at the Chase Manhattan Bank.
She revealed that, private banks could access money at no interest. And not only that. They could use this no-interest to buy Treasury bonds, give them back to the Fed, and receive a quarter of a point interest from the Fed!
So, not only they were getting money effectively free, they were also getting interest for buying bonds with that money - which is only one of the activities that they did with that money - and giving it back to the Fed! Because this was considered an emergency, crisis-related activity. Now, that still is in effect today. It has become the new normal.
Recall also that, ten years after the last financial meltdown, very few spotted and mentioned (even until today) an astonishing admission by the Financial Crisis Inquiry Commission (FCIC). In the conclusions on chapter 20 of the report we read that “As a result of the rescues and consolidation of financial institutions through failures and mergers during the crisis, the U.S. financial sector is now more concentrated than ever in the hands of a few very large, systemically significant institutions. This concentration places greater responsibility on regulators for effective oversight of these institutions.”
So, how could public banking survive and prevail over banking cartels under these conditions?
Solution one: people elect a government that is willing not only to break up the big banks. It will also nationalize the Fed in order to take full control of the money flow around the country. The money will be directed to local municipal banks, not to the zombie mega-banks who play financial games and drive the world into another big financial crisis that will be paid again by the people. This will also contribute to a flood of newborn local municipal banks all over the country that will help the local economies to recover and grow.
Solution two: local communities ignore the Fed and create their own local currencies. With the help of the blockchain technology, they could easily create their own cryptocurrencies backed by the municipal assets.
Above all, communities need to create a different structure of self-organizing, where all citizens will be able to participate equally, without the corporate-type hierarchy. This will minimize the risk of corruption and deterioration of the whole project.