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Consider Local Investment Banks and a New Kind of Federal Reserve

The conventional investment bank puts together investors to finance a start up.

Consider this idea: A new kind of bank that puts together skilled and unskilled labor with investors and with entrepreneurs and managers -- A combination of labor, money and management. And even with resources and equipment if possible. Call this a “Local Investment Bank” or a “Combination Bank”.

These banks would be Local bringing funds directly to where they are needed into a community to produces business and jobs. They would not be creatures of Wall Street.

This new kind of financial institution would help set up private companies, democratic corporations and coops. This entity would be more than a bank for it would be working with others from the very beginning phases of creating a firm.

These could operate in metric mode or a non-metric mode. (see article on metric economy, “Will there be a recovery from capitalism?”)

These banks could be private, that is not government owned.

But also these local investment banks could work in association with a new kind of Central Bank or Federal Reserve. Currently, the US Federal Reserve favors big banks. A reform of this central bank would bring funds to the local level. This new priority would completely change the financial landscape. Funds would now go to local community banks, and to local investment banks which are qualified to participate in this new program. Now local institutions can enjoy all of the advantages that only the huge corporations enjoyed in the past. As result wealth grows in a community and stays in a community, and is not transferred out to Wall Street. Unfortunately, one of the actual operating purposes of a conventional central bank is to further enrich the rich, to lower the profit rates of smaller businesses by redirecting capital to big companies and banks, and to concentrate capital in a single financial center by taking it away from localities.

At the local level is where the jobs and entrepreneurs are. Here also is where the intimate knowledge is of local economics and local problems. A de-centralized national bank or non-central bank or a truly “federalized reserve” would create popular control over an economy. New investment banks would bring triage to where the suffering is and to those who are actually suffering --- small business, the middle class, the working class and the poor. While the rich have suffered financial losses, they do not have to worry about paying their utility bills or whether they can have enough to eat next week. Their very wealth insulates them from social reality, and causes them to be numb to the pain of others, to the vast majority of citizens. So we cannot rely upon them to help with our problems.

Local Investment banks would put power directly in the hands of those who need it. They could be very effective in poor and minority communities. This would be a self help plan and thus highly democratic, for democracy IS self help.

Cage Innoye

Axxiad News