The document proposes four multi-trillion dollar paths to a thriving America: 1) Sovereign money or debt-free money, 2) Land value taxation (Georgism), 3) Public banking, and 4) Ending government financial asset hoarding. Each path is estimated to be worth over $1 trillion per year. The document then provides more details on sovereign money, land value taxation, and public banking. It argues that sovereign money could fund infrastructure and social programs without inflation. It explains how land value, not buildings, determines home values and proposes taxing land values instead of wages and sales. It also outlines the benefits of public banking compared to private banks, using the Bank of North Dakota as an example

1. Presented by:
To:
Date:
America is Not Broke!
Scott Baker
The Henry George School
6/23/15
4 Multi-Trillion Dollar Paths to a Thriving America
Based on the book “America is Not Broke!” available from Tayen Lane:
https://tayen-lane.squarespace.com/america-is-not-broke
And Amazon: http://amzn.to/1zZQKks
Website: americaisnotbroke.net

2. The Big Four: Each worth over a Trillion Dollars per Year
1 Sovereign Money, aka Debt-Free Money
2 Land Value Taxation, aka Georgism
3 Public Banking
4 Ending Government Financial Asset Hoarding (GFAH)
Also, smaller reforms can still add billions to the economy, such as…
 Local Exchange Currency Systems (LETS)*
 Appropriate Regulation – because a criminogenic environment
ultimately costs society more*
All of these super-macro economic solutions have been shown to work though their
proponents don’t always work together. This has to change! To succeed, we have
to stipulate that:
1.People are plastic and can change, at least given the right incentives
2.People are open to reason and persuasion
3.People want something better, even if outside their comfort zone
*These are discussed in more detail in chapter 5 of my book, but I won’t cover them today.

3. $$$ 1. Sovereign Money $$$

4. What is Money?
Is money a “thing”? Money has been
everything from Cowrie shells to beads to
precious metal tokens. Some of these worked
well for a long time, but were all ultimately
limited by the quantity and
availability of the underlying commodity.
Money is:
1.A means of exchange
2.A Store of Value (however imperfect!)
3.Not Wealth! I bought one of these for U.S. $7!
1rst
Axiom: Money should exist in sufficient quantity to meet
the Productive Capacity of the Nation.
Modern American money, since coming off the gold standard in the 1971, is purely fiat money. Fiat Money is
not based on a commodity and is simply:
“inconvertible money made legal tender by a government decree (fiat).”
Taxes are one of the main ways Government can make a particular kind of money acceptable as “legal
tender.”

5. What can Fiat Money do for the Economy?
1 Pay for infrastructure
2 Pay for Social Security
3 Pay for R&D in science, space programs,
foreign aid, education, etc.
4 …Pay for anything that has a positive money
multiplier – e.g. The Money Multiplier for
Social Security is from $1.80 to $2.00 for every
dollar spent, according to 2 independent
studies.
If the money multiplier is positive, the money
spent is an investment that pays off more than
the amount spent.
Examples of negative Money Multipliers are tax cuts for the rich – who mostly invest in non-
productive assets like stocks, bonds and land – and military spending, which produces things that
mostly get blown up or can’t be used or repurposed.
But, what have the trillions spent on banks – up to $29 Trillion including rolling loans, says
Professor L. Randall Wray – actually produced, other than asset bubble inflation?

6. But…what about inflation?
The non-partisan Congressional Budget Office (CBO) calculates
the Output Gap. From Investopedia:
Remember the first axiom: Money should exist in sufficient quantity to meet the
Productive Capacity of the Nation.
The CBO says we averaged a trillion dollar/year Negative
Output Gap from 2008-2013. So, we could have spent
nearly a trillion dollars per year into the real economy
without producing inflation and many economists say we
are still below our productive capacity.
There are other proposals to control inflation too: including
creating a new Government oversight body called a
Monetary Authority (e.g. HR2990).
An economic measure of the difference between the actual
output of an economy and the output it could achieve when it is
most efficient, or at full capacity. There are two types of output
gaps: positive and negative. A positive output gap occurs when
actual output is more than the full-capacity output. Negative
output gap occurs when actual output is less than full-capacity
output.
Has the FRB managed the Value of the Dollar well?

7. Why are we Renting our Money when Government could Create it?
Since the Federal Reserve Act of 1913, with minor alterations, the Federal Government has
paid the Federal Reserve Bank for money with interest-bearing Treasury Bonds whose rate
is largely determined by the FRB itself.
But why?
1The Constitution has a Coinage Clause (Article 1, Section 8, Clause 5), which allows
Congress to “coin Money”*
2We actually had debt-free paper money in circulation – United States Notes – from
$451m to $300m from 1862-1996**.
3The Supreme Court ruled in Julliard vs. Greenman (1884) that the Government may
make paper money under the Constitution.
4We can create electronically any kind of money we can create physically.
* Case structure in the original clause, and lower case ‘c’ was used consistently when referring to ‘coin’ as in ‘to make’ while actual ‘Coin’ was always capitalized.
** Treasury burned its stock in 1996, but U.S. Notes are available on eBay for about twice face value.
United States Note: Note Red seal and wording at
top “United States Note” vs. “Federal Reserve Note”

8. Why does the Debt matter?
Some schools of thought say the debt doesn’t matter because they believe that
the Federal Reserve Bank (FRB) is already part of government and so we are
already creating our own money. But consider:
1The FRB owns only about 18% of Treasury Bonds. The rest are owned by
other entities, including foreign governments like China (the second largest
holder), who use them to depreciate their own currency and strengthen ours,
making their exports more competitive vs. ours, and ultimately taking away our
jobs through off-shoring.
2A whole class of very wealthy Rentiers makes a living off the interest on
Treasury Bonds – money that government could issue itself interest-free.
3 The independent FRB can neutralize government spending with high interest rates precisely when it is needed
the most, during a recession/depression (e.g. The Great Depression).
4 Even in “good times” interest-bearing debt adds as much as 50% to the cost of long-term projects, including
those where the money multiplier shows there is a net benefit!
5 But what about Government corruption? Well, is Government inherently corrupt or is it corrupt because of the
influence of outside money, and if the latter, then would Sovereign Money help end that corruption?
6 As Thomas Edison said “If the government can create a dollar bond, it can create a dollar bill.”
Who do you trust to create money for the People more:
the Banks or the Government? (We could also have both).

9. 2. Land Value Taxation, aka Georgism
Henry George was a
19th
Century Political-
Economist who wrote
the best-seller
“Progress and
Poverty” in which he
identified monopoly in
Land as the cause of
unjust inequality. It is
particularly evident in
dense urban areas. His
philosophy is called
Georgism.

10. Location
2nd
Axiom: “There is Enough, and to Spare,” (Henry George) for us all to
live a decent life.

11. But is Location Really that Important?
Well, try to imagine an ultra-lux building like One57,
where condos go for up to $100m, relocated from
midtown Manhattan to midstate New York. How much
would it be worth then?
In fact, NYC is the most densely productive
place in the country with over $1 billion in
GDP per square mile.

12. Explaining Home Value Change

13. The Canons of Taxation
Sources of public revenue should be:
1. Light on production
2. Easy and cheap to collect
3. Certain
4. Fair

14. "Left-wing" proposals call for society to achieve equity by
redistributing most of the wealth. No distinction is made
between the sources of income (land, labor or capital), and
individuals control only a small portion of the wealth.
Taxing the Fruits of Labor and Capital vs. Collecting Land Value
"Right-wing" proposals hold that efficiency requires more
wealth to remain in private hands (also making no distinction
between rent, wages and interest), and that society, or
government, should only get the minimum it needs for necessary
services, e.g., the role of "traffic cop.”
The Georgist proposal makes a
distinction between the unearned
income of land (rent) and the
earned incomes of labor and capital
(wages and interest). Rent goes to
society, wages and interest to the
individuals who earned them.
The Georgist proposal achieves the goal
of "left-wingers" for security and social
action, but without restrictions on liberty. It
achieves the goal of "right-wingers" to
attain freedom, but without privilege and
monopoly.

15. How Bad is it Now? We have Anti-Georgism!
Ultra-Lux Condos like One57 paying less than 1/100th
the
property tax rate of Condos costing 1/100th
as much! And
many of their owners don’t even live or spend here!
Parking lots paying 1/10th
the property tax as
efficiently used built-upon
property next door! (36-37
St. & 2nd
Ave.)
Vacant Lots paying just $300/year in Property Taxes! (301 East
139th
St.)
Meanwhile, nearly 60,000 people are homeless while vacant and
underutilized land is warehoused and under-taxed!

16. What would we lose under LVT?
Answer: Record-setting 8-figure, even 9-figure, condo sales. As the rent is increased, the
price will come down, because low rent is capitalized into high prices.
Here's today's Quiz:
Assume you are a billionaire looking to buy that $100m penthouse that just sold at One57.
Now, how high would you go if the property tax was $1.73m/year instead of just
$17,268/year (in other words, the property was taxed at about the same rate as for the
$1m condo)?
A. The same $100m
B. $75m
C. $50m
D. Less than any of the above
Several factors probably play into your decision, like how long you will retain the apartment, i.e. how long
you have to pay the property tax (which will probably go up over time too).
One thing is for sure though: a $100m Condo looks a lot less attractive when the property tax is $1.73m
than when it is only $17,268. Another thing is for sure, the city would benefit immensely from collection
of a more appropriate property tax.

17. How much Money Are we Talking About?
Georgist economist Mason Gaffney, explains the loss of
economic rent. US Governments could scrap their bad
taxes and fund public services out of community-created
rents of $5.3 Trillion.
Another professor of economics, Nicolaus Tideman,
reports that the rent readily available through taxation is at
least $1.5 trillion, compared to about $175 billion in
rent collected today, and he calculates that annual income
of the average American family would rise by $6,300 if the
Single Tax was adopted.
With the Land Value Tax, we could eliminate:
• Deadweight taxes on wages, sales, fixed capital, etc.
• The major cause of boom-bust cycles: Land Speculation
• Most Rent-Seeking activity
• Much of the cause of political and other corruption
• Unjust inequality based on monopoly of resources
• Urban sprawl, as land gets used more efficiently
• Blighted warehoused neighborhoods
• Enormous tax breaks for Developers who would then build to sell at more
reasonable prices

18. Under current NYC assessments:
We could replace the taxes on
1 Wages
2 Sales
3 Buildings
4 Commercial occupancy
5 Hotels
6 etc.!
...with a levy of 18% on land value alone

19. Under current assessmentsUnder current assessments
We could replace the taxes onWe could replace the taxes on
11 WagesWages
22 SalesSales
33 BuildingsBuildings
44 Commercial occupancyCommercial occupancy
55 HotelsHotels
66 etc.!etc.!
...with a levy of 18% on land value alone...with a levy of 18% on land value alone
1818% !?!?% !?!?
Isn't that WAY too much?Isn't that WAY too much?

20. Don't Panic!Don't Panic!
NYC's land isNYC's land is
drastically under-assessed.drastically under-assessed.

21. A shift toward LVT
would increase the cost of holding land.
This would:
Stimulate new construction!
Create new jobs and new housing!
More revenue from land
means less penalty on
Buildings, both new and renovated!
Sales, and commerce in general!
Wages — costs less to hire workers

22. What’s the bottom line for me?
Even under the mess that is
our current assessment system,
A revenue-neutral shift
to a 25% lower tax on buildings,
making up the difference
with a higher tax on land value
would mean lower taxes
for most homeowners in NYC!

23. Guess what! It’s been tried, right here!
Here is a Lexington Avenue street fair, in front of a bunch
of those classic “pre-war” buildings that New Yorkers prize.

24. 3. Public Banking – Banking in the Public Interest
There is currently one State Public Bank in North Dakota (The Bank of North Dakota), and a
fully owned Indian Nations Bank in Oklahoma (Bank2)

25. Banks literally make money. As the Bank of
England recently put it . . .
“Banks do not act simply as intermediaries, lending out
deposits that savers place with them, and nor do they
‘multiply up’ central bank money to create new loans and
deposits … Commercial banks create money, in the form of
bank deposits, by making new loans.”
‘Money creation in the modern economy’,
Quarterly Bulletin, 2014 Q1, Bank of England.
Why a Bank?

26. Community banks
Dividends
(Interest)
& Local Needs

27. A typical Systemically
Important Financial Institution
(SIFI) like JP Morgan has just a
31% Loan to Asset ratio – less
than ½ of ND’s community
banks. SIFIs don’t make most
of their money by making
loans!

28. The Smallest Banks Make Most of the Small Business Loans, but
the Biggest Banks have Most of the Assets
3rd
Axiom: Small and Close Services are Better for Communities than Large
and Distant Services.

29. The Biggest Banks have the Biggest
Losses by Percent and Amount

31. Small Banks are Disappearing

32. 40% of the cost of public projects goes to interest.
Rent in Public Housing
Cost of interest on capital
77%
Drinking Water
Cost of interest on
capital 38%
Garbage Collection Fees
Cost of interest on capital 12%
From Margrit Kennedy, http://www.monneta.org/upload/pdf/Pres_MK_CompC.pdf
What of public expenditures?

33. Other Reasons for a Public Bank
 New liquidity rules could cause bond interest rates to soar
 State and municipal bonds excluded from “high quality liquid assets.”
 Without interest, California could be $72 billion richer.
 General Obligation, Revenue, & other bonds, 2013
 $92 billion principal + $72 billion interest = $164 billion. Nearly double!
 Minimal operating costs
 No bonuses, fees, commissions
 No high-paid CEOs
 No need for buildings, branches, tellers
 No need to advertise
 Banks have unlimited low-interest credit
 Lines with the Fed: States and municipal governments have no credit line with the Fed
 States are now hit with lower credit ratings, making borrowing even more expensive
 Banks face new regulatory & compliance issues with Dodd-Frank. A State Public Bank
could help community banks comply.
 A much better lending option for the poor & unbanked. Can team up with existing micro-
lenders too (e.g. Grameen Bank, Postal Banks).
 Countercyclical lending allows sustained growth.
 Less corrupt, more efficient, more profitable.
 The Bank of North Dakota outperformed private banks and has been scandal-free since inception
(1919)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
interest
principal
Interest & Principal owed
by California

34. Possible Funding Sources
6) Transfer of City’s/State’s deposits and cash accounts
currently held in large commercial banking or other
institutions
7) City’s/State’s equity investment, funded through a one-time
appropriation from the General Fund or transfers of assets
from the municipality’s existing investment pool (see next
section).
A public bank could funded through a variety of sources and vehicles, including:
Source: http://www.seattlepublicbankcoalition.org/public-bank-solutions
1) Equity investments in non-voting shares sold to local governments and pension funds
2) The issue of debt (short-term and medium-term notes) purchased using funds under
management by the City/State Treasurer
3) New Certificates of Deposit sold to the Treasurer and other “outside” investors
4) Banker’s acceptances
5) Repo-like operations that would be conducted with the City/State Treasurer to
insure adequate provision of short-term liquidity.

35. …And about that funding:
4. Ending Government Financial Asset Hoarding (GFAH)
Each year, every government entity from the local fire department to the
State Pension fund, is required to produce a report of their total assets.
This is called the Comprehensive Annual Financial Report (CAFR).
The CAFR lists all assets of the entity for all time, and differs from the
Budget, which is just a statement of liabilities and assets for the year.
There are over 200,000 CAFRs adding up to
Trillions of dollars…maybe much more.
A gusher of money…but for whom?

36. What does the CAFR Include?
1. Governmental Funds
2. Propriety Funds
3. Fiduciary Funds
4. Component Units
The budget you hear about involves primarily the Governmental Funds. The other three
major categories are not included in the budget and this is in most cases where most of the
surpluses are located…Even in the items that are part of the budget (Governmental Funds)
there are surpluses they are not telling you about. Here is how it works. A proper budget is
made up of three parts:
1)Balance brought forward from previous year's revenues not spent;
2)Current projected revenues; and
3)Current projected expenditures. The budget is Items 1 and 2 minus Item 3. It is just that
simple.
However, in the governments' budget process, they forget about Item 1. Money available
and not spent in previous years is not included in the budget.”
– from CAFRMAN.COM
“The CAFR is prepared under the accounting and reporting standards
outlined by the Government Accounting Standards Board (GASB). It is
an audited report. The CAFR has four parts:
4th
Axiom: If a Process can be Made Complex and Obscure in order to
Benefit the Elite, it Will Be.

37. What are Our Assets Right Now?
Check the Comprehensive Annual Financial Reports (2014)…
 $181 billion in NY State Fiduciary Net Position (March 31, 2014, p. 44)*
 $192 billion in NY City Fiduciary Net Position (June 30, 2014, p. 52)*
What if 10% of these 2 liquid funds ($37.3B) was reallocated to a Public Bank?**
There are 10s of billions in other NY Investment funds too
OK, these assets are not quite a Money Tree, but they are
money that can be loaned into the community, often with
higher returns or at least less risk than some Wall Street
investments.
Remember: it is not under-funding that hurts pension
fund returns, it is under-performance and volatility.
* Liquid investments only. Does not include fixed capital
** By comparison, the Bank of North Dakota has $6.9B in assets (2014 FS)

38. Governments do have to pay their obligations for services and to
pensioners, but are Governments really broke when…
1 In almost every case, governments have more than enough in their major investments (e.g.
pension funds) to cover expenses for years, even decades, even with 0% ROI. They often
have enough just in “Rainy Day” funds to cover their entire deficit. E.g. Public Banking
Institute Founder Ellen Brown found $71b in a Treasurer’s rainy day fund, more than
enough to cover California's 2010 $26.3 billion deficit. Since when was government
supposed to operate at a profit and use those profits to pay its bills instead
of taxes?!
2 New York State lost $42b from 2008 to 2009 in its pension fund, while complaining about
a $9b “budget gap.” Which is the more serious amount?
3 Multi-decade projected investment returns are based on currently underperforming assets –
e.g. bond returns in an historically low interest environment (Reuters).
4 Employee/Employer contributions are not counted as part of the fund income when deciding
whether the fund has a “shortfall.” If it was, this could reduce the necessary ROI (often
unrealistically given as high as 8%), in half.
5 It is the private fund managers who decide how to measure and present the ROI, not the
overseeing Comptrollers and Treasurers. This has been shown to distort actual returns
positively.
6 Non-current liabilities are measured years out, but only current assets are reported against
them. “The new GAAP accounting implemented over the last 8 years established by (the)
GASB requires local government accounting to project all liability as if it is due today.” –
Walter Burien, CAFR1.COM.

39. Clearly, the CAFRs need an independent audit, and not by
officials whose next job may be on Wall Street!
Until then, anyone with patience and a computer can download their municipal
CAFRs online and use this Review Process to learn what assets are available:
http://www.cafrman.com/ReviewProcess.htm.
REVIEW PROCESS
Introduction
The review process is very simple. It involves only two worksheets (schedules). [NOTE: Most people are not interested in the details of forms and explanations
of the forms. However, in The CAFR eBook both forms are presented in a couple of ways as well as a spreadsheet program and a word processing program for
each of school district, city, county and State.]
A computer is not needed to conduct a review or do an economic impact analysis. All that is needed is:
-A copy of the government’s Comprehensive Annual Financial Report (CAFR)
-Two forms
-A sharp pencil
-A calculator.
Steps in conducting a review and preparing the economic impact analysis
1. Get a copy of the government’s/school district’s most current Comprehensive Annual Financial Report (CAFR).
2. Go to each fund/subfund section, locate the accounts with surpluses based on the steps shown below; total them for each subfund, and write them down as
shown below. In addition the Exhibit A in each of the State reports provided in this writing. The Exhibit A is the complete review. So a person has over 40
examples to use in the learning process.
3. Total the list of subfund surpluses to arrive at the total surpluses for the government.
4. Divide the result in Step 3. by the population and you have the per capita surpluses.
5. Take the total surplus amount to the proper economic impact form and complete the computations shown for each cell in the economic impact form. The
computations are very simple.
That's it. The next step is preparing a report on the results of the review and economic impact analysis. Go to the Report Section of this writing.

40. Which Reform will you Choose to work on?
Sovereign Money? Land Value Taxation? Public Banking?
Ending Government Financial
Asset Hoarding (GFAH)?
Whichever one you choose, there are
many groups and individuals to help
guide and work with you.
Just remember…
America is Not Broke!

41. Thank You!
Available from Tayen Lane:
https://tayen-lane.squarespace.com/america-is-not-broke
And Amazon: http://amzn.to/1Ihcc54
Website: americaisnotbroke.net
America is Not Broke!
by Scott Baker