THE WASHINGTON UNION PAPERS: NO. 8

PUBLIC BANKING & FINANCIAL SOVEREIGNTY: THE KEY TO AMERICAN INDEPENDENCE

To the People of the United States,

A nation that does not control its own economy does not control its own future. A people whose wealth is siphoned off by private financial institutions, whose government is forced to beg for loans from the very entities that have profited from their labor, whose prosperity is dictated not by the will of its citizens but by the whims of bankers—such a people are not truly free. They are subjects, not sovereigns. They are ruled, not rulers. And that, my fellow Americans, is precisely where we stand today.

For too long, our economy has been held hostage by a private banking system that exists not to serve the people, but to extract wealth from them. The Federal Reserve, an institution that operates with all the transparency of a secret society, dictates monetary policy in the interests of financial elites. The major banks, bloated from endless bailouts and handouts, wield more power over our economy than our own elected officials. Wall Street profits, Main Street withers, and the cycle continues, unabated, unchecked, unchallenged.

This is not capitalism. This is not democracy. This is financial servitude.

We have been told that this system is necessary, that it is inevitable, that there is no alternative. We are told that the free market requires private banks to issue our credit, that the government must borrow at interest to fund its own operations, that debt is simply a fact of modern economics. These are lies, propagated by those who benefit from our dependence, designed to keep us shackled to an economic system that serves the few at the expense of the many. But the truth, plain and simple, is this: There is another way. There has always been another way. And it is time we reclaim it.

Public banking is the key to American financial sovereignty. It is not a new idea. It is not radical. It is the solution that built great nations, that secured economic independence for generations, that ensured wealth remained in the hands of the people rather than funneled into the coffers of financial overlords. And yet, it has been deliberately erased from our national discourse, buried beneath decades of propaganda designed to convince us that we must forever rent our own prosperity from those who create nothing, who risk nothing, who contribute nothing.

Imagine an America where the interest on government borrowing does not fatten the pockets of private lenders, but instead funds infrastructure, education, and industry. Imagine an America where credit is issued not to fuel speculation and financial gambling, but to invest in the productive capacity of our people. Imagine an America where banks serve communities, not shareholders, where public wealth is reinvested in the public good, where our financial destiny is determined by the citizens of this republic—not the boardrooms of multinational banking conglomerates.

This is not a fantasy. It is not utopian. It is how economies were built before the rise of the predatory financial class. It is how we will reclaim what has been stolen from us.

I. The Case for Public Banking

For over a century, Americans have been conditioned to believe that banking is the sole domain of private enterprise, that financial institutions must operate for profit, and that the issuance of credit and the flow of capital must be dictated by market forces rather than public need. This is not only a dangerous misconception—it is an outright deception, one that has allowed private banks to consolidate immense power, dictate economic policy, and exploit the very people whose labor sustains them. Public banking is not a radical departure from sound economic principles; it is a necessary correction to a system that has run amok, placing the interests of financial elites above those of the nation itself.

A public banking system is one in which financial institutions operate as public utilities, accountable to the people rather than private shareholders. It is a system in which the issuance of credit, the allocation of investment, and the structure of financial services are designed to serve the broader economic interests of society, rather than to maximize the profits of a privileged few. The benefits of such a system are numerous and far-reaching, touching every aspect of the economy—from infrastructure investment to small business development, from student loan reform to housing affordability, from financial stability to the reduction of government debt.

To understand the necessity of public banking, one must first grasp the reality of what private banking has wrought. The current financial system is a parasite, extracting wealth rather than creating it, thriving not on economic productivity but on the endless accumulation of debt. When the government borrows, it does so at interest from private banks, enriching those banks while burdening taxpayers with the cost of repayment. When businesses seek loans, they must navigate a labyrinth of fees, predatory interest rates, and arbitrary denials, all while being at the mercy of profit-driven financial institutions that care little for long-term economic stability. When individuals require financial services, they are met with exploitative credit card fees, overdraft penalties, payday lending schemes, and mortgage structures designed to generate billions in profits for Wall Street rather than provide sustainable homeownership opportunities for American families.

This is not the natural order of things. It is not an inevitability of capitalism, nor a requirement of modern economics. It is a choice, made by policymakers who have been bought and paid for by the financial industry, by regulators who have abdicated their responsibilities, by institutions that have been allowed to operate with impunity. It is a system designed to ensure that wealth flows ever upward, that power remains concentrated, that the average citizen remains perpetually in debt, laboring not for their own prosperity but for the enrichment of those who control the levers of finance.

The alternative is clear: a system in which banking serves the people, not preys upon them. A national public bank, chartered to issue credit at minimal or no interest, would eliminate the need for the federal government to borrow from private financial institutions, saving taxpayers trillions in interest payments over time. State and municipal public banks, modeled after the successful Bank of North Dakota, would provide low-interest loans to local businesses, support community development projects, and keep wealth circulating within local economies rather than being siphoned off to multinational banking conglomerates. Public banks would be prohibited from engaging in speculative investments, ensuring that they remain stable, reliable institutions dedicated to the public good rather than to reckless financial gambling.

Consider the impact of such a system on infrastructure. America’s roads, bridges, transit systems, and energy grids are in a state of decay, with trillions of dollars in necessary repairs and improvements left unfunded. Why? Because private banks and bond markets demand exorbitant interest rates for infrastructure financing, making large-scale investment prohibitively expensive. A public bank, by contrast, could issue loans at near-zero interest, allowing governments at every level to rebuild and modernize critical infrastructure without being trapped in endless cycles of debt. This is not speculation; it is a proven model. The Bank of North Dakota has long provided funding for public projects at lower costs than private lenders, ensuring that investment in the state’s future is not dictated by the demands of Wall Street.

The same principle applies to housing. America faces a housing crisis, with homeownership increasingly out of reach for working-class families, rents skyrocketing in major cities, and corporate landlords buying up single-family homes to turn them into permanent rental units. Private banks, rather than offering fair and accessible mortgages, have incentivized predatory lending, pushing millions into subprime loans, foreclosures, and cycles of refinancing that benefit only the lender. A public bank, however, could provide direct home loans with fair terms, stabilizing the housing market and ensuring that families are not forced to spend decades paying off inflated mortgages designed to maximize profit extraction rather than promote stable communities.

The student debt crisis—now surpassing $1.7 trillion—is yet another testament to the failure of private banking. The federal government guarantees student loans, but private lenders administer them, ensuring that a vast portion of student debt repayment goes not toward education funding but toward bank profits. A public banking system would eliminate this predatory arrangement, offering low-interest or no-interest loans for higher education, ensuring that a college degree is a pathway to opportunity rather than a lifetime sentence of financial bondage.

Opponents of public banking, almost invariably tied to the financial industry, argue that such a system would be inefficient, prone to corruption, or incapable of sustaining itself without taxpayer subsidies. But this argument collapses under even the slightest scrutiny. Private banks have proven themselves far more corrupt, with institutions like Wells Fargo, JPMorgan Chase, and Goldman Sachs routinely engaging in fraud, market manipulation, and exploitative practices that have harmed millions. The inefficiencies of the private banking system—manifest in bloated executive salaries, stock buybacks, and speculative bubbles—far outweigh any supposed risks associated with public banking. And as for sustainability, public banks, by their very nature, reinvest earnings into their communities rather than extracting wealth from them, ensuring a self-sustaining cycle of growth and prosperity.

At its core, the argument for public banking is not just about economics—it is about sovereignty. A nation that cannot finance its own development without going into debt to private entities is not truly independent. A people who must borrow at high interest simply to afford education, healthcare, and housing are not truly free. Public banking is the foundation upon which economic democracy is built, the mechanism by which the wealth of the nation is reclaimed for the people rather than hoarded by financial elites.

The time has come to break the cycle of financial servitude. The time has come to establish a banking system that serves the interests of the many rather than the profits of the few. The time has come for public banking—not as a radical experiment, but as a return to the fundamental principles of economic justice and national sovereignty.

We must reject the stranglehold of private finance. We must demand that our money, our credit, our economy be controlled by the people, for the people. The case for public banking is clear. The only question that remains is whether we will seize the opportunity to reclaim our economic future—or whether we will allow it to remain in the hands of those who have profited from our submission for far too long.

II. A History of Financial Sovereignty

A nation that does not control its own financial destiny is not sovereign—it is captive to the whims of those who do. The history of financial sovereignty is the history of nations rising and falling, of empires built on economic independence and crushed under the weight of debt and foreign control. It is the history of great leaders who understood that to govern a people without control over the issuance of money, the regulation of credit, and the stability of banking was to rule in name only, while true power rested in the hands of financiers. It is the story of America’s founding vision of financial independence, its struggle against the forces of private banking, and its eventual surrender to the very monopolists it once sought to break.

From the very beginning, America’s leaders recognized the fundamental importance of financial sovereignty. The Revolutionary War was not just a rebellion against British political rule; it was also a war against British financial dominance. The American colonies had suffered under a system where they were denied the ability to issue their own currency, forced instead to rely on British banks and gold reserves. When the colonies attempted to create their own paper money—the Continental—it was aggressively devalued through counterfeiting by British agents, demonstrating that economic control was just as crucial as military strength in securing independence.

Alexander Hamilton, the first Secretary of the Treasury, understood that a new nation could not survive without a strong, centralized financial system. He championed the creation of the First Bank of the United States in 1791, a public institution designed to provide stability, regulate credit, and establish a foundation for economic growth. Hamilton’s vision was not universally accepted—his political rival, Thomas Jefferson, feared the concentration of financial power and sought a more decentralized system—but history has proven that Hamilton’s instincts were correct. The First Bank provided a stable currency, allowed the government to manage debt responsibly, and ensured that America would not be at the mercy of foreign creditors.

Yet, despite its success, the First Bank of the United States was dismantled in 1811, as private banking interests and states’ rights advocates sought to weaken federal financial authority. The consequences were immediate and disastrous. The War of 1812 exposed the financial weakness of the young nation, as the lack of a central bank left the government scrambling for funds, forced to borrow at exorbitant interest rates from private banks. Recognizing this failure, President James Madison, once a skeptic of central banking, reversed his position and oversaw the creation of the Second Bank of the United States in 1816. This institution once again brought stability, but it too fell victim to political and private financial interests.

The destruction of the Second Bank of the United States by Andrew Jackson in 1833 marked a turning point in the battle for financial sovereignty. Jackson, a populist who saw the bank as an institution of corruption and elitism, waged what became known as the “Bank War,” withdrawing federal deposits and scattering them across smaller state banks. While Jackson’s mistrust of concentrated financial power was not unfounded, his victory over the Second Bank did not bring financial independence—it brought chaos. Without a central banking authority, the U.S. entered a period of wild economic swings, speculative bubbles, and panics that culminated in the devastating Panic of 1837. The very financiers Jackson sought to weaken gained even more power as private banking interests filled the void left by the destruction of the national bank.

Throughout the 19th and early 20th centuries, America’s financial system remained fractured, unstable, and vulnerable to the manipulations of private banking cartels. The Panic of 1907 was a stark reminder of the dangers of an unregulated financial system. With no central authority to stabilize the banking sector, a crisis sparked by speculation and bank runs nearly collapsed the economy. In response, the Federal Reserve was established in 1913, ostensibly to provide stability and act as a lender of last resort. However, unlike Hamilton’s vision of a national bank operated for the public good, the Federal Reserve was designed to serve private banking interests. It was, and remains, a quasi-private institution, controlled by the very financial elite it was meant to regulate.

The Great Depression of the 1930s further underscored the perils of a financial system dominated by private banks. As speculative excess led to economic collapse, millions of Americans lost their homes, their savings, and their livelihoods while the banks that had engineered the disaster were bailed out or restructured. In response, Franklin D. Roosevelt enacted sweeping reforms, including the Glass-Steagall Act, which separated commercial and investment banking to prevent the kind of reckless speculation that had fueled the crash. Roosevelt also oversaw the creation of federal programs designed to inject money directly into the economy, bypassing the private banking sector and demonstrating the power of government-controlled financial instruments.

For a time, America reclaimed a measure of financial sovereignty. The post-World War II economy, fueled by strong government investment, public works projects, and a robust industrial base, created the strongest middle class in history. The government issued bonds to fund infrastructure, education, and housing, rather than relying solely on private credit markets. Banks were heavily regulated, preventing the kind of rampant financial speculation that had led to past crises.

But this balance did not last. The financial deregulation of the late 20th century—beginning with the weakening of Glass-Steagall in the 1980s and culminating in its full repeal in 1999—unleashed a new era of banking dominance. Wall Street, freed from the constraints of meaningful oversight, transformed the economy into a speculative casino, with financial products designed not to invest in the real economy but to extract wealth from it. The rise of multinational financial institutions, the expansion of consumer debt as a substitute for real wage growth, and the outsourcing of American industry all conspired to strip away the financial sovereignty that had been painstakingly built over the preceding decades.

The 2008 financial crisis was the final, brutal confirmation that America had lost control of its financial system. A government that should have stood as the guardian of its people instead became the servant of its banks. Trillions were spent bailing out the very institutions that had caused the collapse, while millions of Americans lost their homes, their savings, and their futures. The same banks that were deemed “too big to fail” grew even larger, and the Federal Reserve continued its policy of printing money to prop up financial markets rather than invest in the American people.

This is the trajectory we must reverse. Financial sovereignty is not a relic of the past; it is the key to the future. We must look to history not as a series of lost opportunities, but as a guide to reclaiming what has been stolen. Hamilton’s vision of a national bank, Roosevelt’s use of public finance to fuel economic recovery, the success of public banking institutions like the Bank of North Dakota—these are the models upon which we must build. We must break the stranglehold of private banks over our economy, reestablish public financial institutions that serve the people, and ensure that never again is American prosperity held hostage by the greed of a few.

History is clear: financial sovereignty is the foundation of national sovereignty. Without it, no nation is truly free. The time has come to reclaim our independence, to take back control of our economy, and to ensure that our financial system serves the people, not the profiteers.

III. The Path Forward

Financial sovereignty will not be handed to us—it must be taken. The stranglehold that private banking institutions have over our economy is not a natural order, nor is it unbreakable. It is a system designed by and for financial elites, a system that extracts rather than invests, that enriches the few at the expense of the many. But history has shown that what was built to serve the powerful can be dismantled by the will of the people. The question is not whether public banking and financial independence are possible, but whether we have the courage and determination to demand them.

The time for incremental reforms and half-measures has passed. We need nothing less than a full-scale transformation of our financial system—one that restores banking as a public utility rather than a mechanism for private profit. To achieve this, we must take decisive steps at every level of government, from the federal to the municipal, to establish public banks, sever our dependency on private debt issuance, and reclaim control over the lifeblood of our economy: credit and currency.

The cornerstone of financial sovereignty is a National Public Bank, a federally owned institution that operates not for profit but for the economic well-being of the nation. Such a bank would serve as the primary financial institution of the United States, issuing loans at minimal or zero interest for infrastructure, education, small businesses, and other public goods. It would replace the need for government borrowing from private lenders, ensuring that taxpayer dollars are invested directly into the economy rather than handed over as interest payments to private financial institutions.

A National Public Bank would also provide a safe, stable alternative to the speculation-driven private banking sector. Unlike private banks, which profit from boom-and-bust cycles and extract wealth through high-interest loans, fees, and penalties, a public bank would exist to stabilize the economy, prevent financial crises, and ensure that credit is allocated based on the needs of the people, not the profit motives of Wall Street.

The creation of a National Public Bank would require congressional authorization, but it is not without precedent. The First and Second Banks of the United States, though ultimately destroyed by political and banking interests, demonstrated the viability of a national financial institution that serves the interests of the country rather than those of private financiers. The model exists—the will to implement it must follow.

While the establishment of a National Public Bank is essential, the fight for financial sovereignty must also be waged at the state and local levels. States and cities must take the initiative to create public banks that operate independently of Wall Street, keeping local wealth within communities rather than funneling it into the hands of multinational financial institutions.

The success of the Bank of North Dakota provides a blueprint for such institutions. Established in 1919, it has consistently outperformed private banks, providing low-interest loans to farmers, small businesses, and public projects while generating revenue for the state. During the 2008 financial crisis, when private banks collapsed under the weight of their own greed, the Bank of North Dakota remained strong, proving that public banking is not only viable but superior to the unstable, profit-driven model of private finance.

Every state in the country should have its own public bank, offering direct lending to municipalities, small businesses, and infrastructure projects. Cities, too, must create their own financial institutions, ensuring that taxpayer dollars are invested in local development rather than sent to Wall Street banks that prioritize speculation over economic stability.

The power of private banks does not come solely from their ability to issue loans—it comes from their control over the financial mechanisms of the nation. If public banking is to succeed, we must break the private banking monopoly by challenging the supremacy of institutions like JPMorgan Chase, Wells Fargo, and Citigroup, whose predatory practices have undermined economic security for decades.

This means enforcing strict antitrust regulations to dismantle financial monopolies, preventing banks from growing so large that their collapse threatens the entire economy. It means restoring Glass-Steagall, the Depression-era law that separated commercial and investment banking, ensuring that financial institutions cannot gamble with depositor money. It means ending the too-big-to-fail doctrine, ensuring that banks that engage in reckless speculation are not bailed out by taxpayer dollars but are instead broken up and restructured.

Public banks must also provide an alternative to predatory consumer banking, offering low-cost checking and savings accounts, eliminating overdraft fees, and providing affordable credit to individuals and businesses. By offering these services, public banks can compete directly with private institutions, forcing them to reform or risk obsolescence.

The Federal Reserve, despite its name, is not a truly public institution. It operates as a cartel of private banks, controlling the issuance of money, setting interest rates, and dictating financial policy in the interests of Wall Street rather than the American people. If we are to achieve true financial sovereignty, we must reform or replace the Federal Reserve with a system that is democratically accountable.

One solution is to nationalize the Federal Reserve, placing it under the direct control of Congress and ensuring that monetary policy serves the needs of the country rather than the banking elite. This would allow for direct government issuance of credit, eliminating the need to borrow from private institutions and ensuring that money creation is aligned with economic productivity rather than speculative profiteering.

Another alternative is to establish a competing public currency, allowing states or municipalities to issue their own forms of credit that operate independently of the Federal Reserve. Historically, states and local governments issued their own currencies prior to the centralization of banking in the 20th century. By reviving this practice, communities could create economic ecosystems that are resilient to financial crises and immune to the manipulation of Wall Street.

None of these reforms will happen without a direct, organized challenge to the entrenched financial establishment. The banks will fight tooth and nail to protect their power, using every tool at their disposal—lobbying, propaganda, political influence—to undermine the push for public banking. But history has shown that when the people demand change, even the most powerful institutions can be brought to heel.

We must mobilize at every level—pressuring elected officials, launching ballot initiatives, supporting candidates who champion public banking, and organizing grassroots movements that challenge financial exploitation.

The fight for public banking must become a central political issue, one that is impossible for lawmakers to ignore.

The movement must be framed not as an abstract financial debate, but as a fight for economic justice, national security, and the very sovereignty of the country. It must be made clear that every dollar siphoned off by private banks is a dollar stolen from the people, that every community denied access to fair credit is a community condemned to economic servitude, that every government that borrows at interest when it could issue money directly is a government in voluntary bondage.

We stand at a crossroads. The financial system as it exists today is unsustainable, a ticking time bomb of debt, speculation, and inequality. We can either continue down the path of servitude, allowing private banks to dictate our economic fate, or we can seize control of our own financial future, reclaiming the power that has been stolen from us.

Public banking is not a radical idea. It is not an untested experiment. It is the path that sovereign nations must take if they wish to remain sovereign. It is the means by which wealth is returned to the people, by which credit is restored as a public good, by which financial security is rebuilt not as a privilege but as a right.

We must demand public banking at every level of government. We must challenge the private banking cartel that has robbed us blind. We must reclaim our economic independence—not tomorrow, not in some distant future, but now. The path forward is clear. The only question that remains is whether we will seize it or surrender. Whether we will reclaim our economic freedom or remain in chains. Whether we will build a system that serves the people or continue to serve the system that enslaves us. But make no mistake—change is coming. Public banking is not a dream, nor a distant possibility. It is an inevitability. The old financial order is crumbling, its corruption exposed, its greed unsustainable. The only question is: will we be the ones to forge the new system, or will we allow the same thieves who stole our prosperity to write its next chapter? The time for waiting has passed. The time for action is now. Either we rise, or we kneel. Either we fight, or we forfeit our future. History will record what we choose. Let it be known that we chose revolution.