This is interesting in that New Mexico voted today to move the State’s money to credit unions and community banks. The Huffington Post is taking credit for starting the move your money to small banks movement, something that several blogs suggested before they picked it up. Still, it is noteworthy and is actually a step towards self-determination and is really a partial move towards creating a state chartered bank. They should take this the rest of the way and the state should deposit all their funds in their own state chartered bank, they could then support the other banks via the same methods used by the Bank of North Dakota.
New Mexico’s House of Representatives voted Monday to pass a bill that allows the state to move $2 billion – $5 billion of state funds to credit unions and small banks.
The municipal funds bill was approved 65-0 (roll call – PDF), and is subject to a vote by New Mexico’s Senate. Governor Bill Richardson told the bill’s sponsor that he supports the legislation.
Credit Union Times, spoke to one banker who believes that the bill got a boost from Huffington Post’s Move Your Money campaign:
The altered view of New Mexico lawmakers in favoring local control of state funds, officials said, follows national mention of the New Mexico effort in the “Move Your Money” campaign of New York pundit Arianna Huffington in her online Huffington Post columns.
“I think Huffington gave this bill a little traction,” said Juan Fernandez, vice president of government affairs for the Credit Union Association of New Mexico
Move Your Money is a project started by Arianna and Rob Johnson that aims to spur financial reform at big banks by encouraging account holders to move their money to smaller credit unions and community banks. New Mexico currently keeps $1.4 billion in accounts at Bank of America.
New Mexico State Representatives Brian Egolf (D-Santa Fe) and Timothy Keller (D-Bernalillo) sponsored the bill, HB 66. Rep. Eglof told the Huffington Post in January that the legislation would “direct the New Mexico Department of Finance and Administration to ‘give a preference to a community bank to act as the fiscal agent of the general fund operating cash depository account.'”
If they created their own bank, it would have more assets behind it than any other bank and they could fraction their deposit base in support of state projects and in support of other banks. Any such attempt, however, must keep tight controls to the amount of fraction ability they have, thus they would be best off to create the bank within the framework of Freedom’s Vision where State Chartered Banks would replace the functions of the 12 Federal Reserve Banks. The major difference is WHO controls the MONEY, and WHO benefits from any interest generated!
Under Freedom’s Vision, the fractional limits would all be reached at the end of the transition period. Fractional ability is not inflationary in and of itself, it only increases the quantity of money when the amount of fractional ability is raised and it multiplies any new money added to the system. This is why controls such as those used by Freedom’s Vision need to be implemented at the same time. Again, this is a historic opportunity to take down one type of leverage and to replace it with another – the primary difference is who benefits and that there is no build up of debt at the Federal level while the ratio of credit money and real money is brought way down and kept down.