From Speculation to Sustainability:
Reclaiming Finance for People and Planet
According to Professor Robert C. Hockett (2024), our financial system has morphed into a "money-pump that encourages, aids, and abets destructive and wealth-concentrating speculation".
Can we create a sustainable financial system that works for the people and the planet? Hockett, professor at Cornell University in the U.S., has an optimistic but realistic answer: Yes, we can! And it has never been easier to make the transition than today.
Join us for a thought-provoking webinar Wednesday 23 April at 19-20.30 CEST (1-2.30 pm EDT) when Prof. Hockett and our panel discuss his grand plan for how to transform money, banks, and financial markets to work for the society, not for the financial sector. Register now to secure your spot:
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Organizers
When? Where? How?
A broken financial system
Many have been told that the state ultimately controls money creation. But few know that this power has been delegated to private banks. This means that banks don't need to borrow to give a loan. The banks simply create new money out of thin air, on behalf of the state. Why is this a problem?
To give private banks endless possibilities to expand our public money supply, without any requirements on how to spend it, is madness. As Hockett (2022) writes, this means that "there is practically no limit to how much new money can be generated and misallocated to destructive" purposes.
Banks are private profit-seeking companies, that invest our public money in anything profitable for them, such as speculative financial markets and fossil fuel industries. As Hockett concludes: "The upshot is intolerable injustice and massively scandalous waste." (Hockett, 2022).
How did we get here?
Why was money creation delegated to private banks? As Hockett explains, there were good historical reasons.
Metal coins was a scarce resource. This created a shortage of money and lack of investments.
The most feasible solution was to outsource payments and money creation to local banks. They could keep track of payments through paper and pen, and create new money flexible for the needs of local businesses and citizens.
However, globalization and digitization have enabled large global banks and 'remote participation in production' through trading on financial markets. As a result, banks create more money for speculation than ever before.
Today, banks pump huge amounts of public money into financial markets. This leads to reinforcing spirals of increasing asset prices, new loans, and purchases that push up the asset prices further. This has created a "financialized" economy where destructive speculation has become more profitable than production itself.
Hockett's solution: Public Money
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"As Hockett demonstrates, the future now available to us includes transactional privacy and free banking services for all households and businesses, leak-proof monetary policy for all central banks, and a transformed financial system that is once again geared toward production instead of mere speculation"
- Ro Khanna, Professor of Economics and U.S. Congressman.
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Hockett's proposal "would sharply reduce costs, speculative excesses, and opportunities to defraud, while also eliminating the problems of financial exclusion and the unbanked with a single stroke.” It would also: ”reduce the current digital cacophony and excess profit exploitation to a productive minimum."
—Jeff Madrick, New York Times economics columnist and author of several books.
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"Fans and foes alike of digital financial technologies will revel in the breadth and sheer exhilaration of Hockett’s ambitious and sweeping proposal to reimagine the US financial system, and to dare policymakers to reply to the question ‘why not?"
— Sarah Bloom Raskin, the Colin W. Brown Distinguished Professor of Law, Duke University; former Deputy Secretary of the Treasury, 2013–2017; former Governor, Federal Reserve Board, 2010–2013
Imagine that there was a simple solution, that had the following effects:
According to Hockett (2022), all these effects, and much more, can be achieved almost "with one single stroke". That is "to offer all citizens, along with the U.S.’s state and local governments, small businesses, and other non banking firms too, digital wallet accounts".
How can a public digital wallet be a major step to solve so many problems?
Reclaiming Finance for People and Planet
A public digital wallet for everyone can according to Hockett have revolutionary consequences. We won't need private banks any longer to (i) pay anyone or (ii) increase or decrease the money supply.
With public digital wallets, everyone can now pay each other independently of private banks. Moreover, the public sector can create and inject all new money that the economy needs – for the purchasing power money to remain stable over time – directly into the digital wallets.
When we are no longer dependent on private banks, there is no need for government bailouts, subsidies and guarantees. Banks can be allowed to fail like normal businesses. Banks will be reduced to mere intermediaries that only lend money they have borrowed.
The public can still lend money to banks with clear requirements on using it for productive purposes. However, the important difference is that banks are no longer automatically given the right to create and spend public money on whatever they want. Instead, the people decide how new money is spent through our democratic institutions.
Urgent need for action
Hockett (2022) writes that his proposal will lead to "a massive downsizing" of the "too big to fail" financial companies. They will no longer be able to "strong-arm our legislators and other public officials", "for the plan here is precisely to shrink and disarm them, in addition to rendering us no longer dependent upon them".
The banks have realized this, and are scared: "the rent-taking middleman institutions that have benefited by the old regime see the threats posed to their oligopoly by the emerging regime” (Hockett, 2022).
That is why they are doing everything they can to postpone and stop the development of public digital wallets, also called "Central Bank Digital Currencies" or "Treasury Direct Currencies" (Hockett, 2022).
As Hockett (2022) concludes, therefore "We must act quickly".
About Professor Robert C. Hockett
Robert Hockett is a distinguished professor at Cornell University Law School who has been shaping the discourse in financial and monetary law since 2004. This is why you should listen to him:
- His expertise is sought after by prominent institutions such as the Federal Reserve Bank of New York and the International Monetary Fund, and the American Monetary Institute, Harvard Law School’s JustMoney.org network, and the Public Banking Institute.
- He has consulted or drafted legislation for prominent figures such as Senators Bernie Sanders, Elizabeth Warren, and Marco Rubio, as well as Representative Alexandria Ocasio-Cortez.
- He serves as a Fellow of the Century Foundation and authors commissioned work for the New America Foundation.
Through his balance of rigorous research, practical policy insight, and an unwavering commitment to equitable economic structures, Robert Hockett has become a trusted authority and leading voice in financial regulation, monetary innovation, and forward-looking policy solutions.
Panel discussion
After the presentation by Robert. C. Hockett, invited guests will have a panel discussion with Prof. Hockett to critically comment upon Hockett's ideas and discuss how we can bring about this change he suggests today.
Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. She is the author of 12 books, including the groundbreaking Web of Debt and The Public Bank Solution. The latter traces the history and evolution of the current private banking system, showing how it usurped the power to create money from the public, and how the people can take that power back through public banks that operate in the public interest. Ellen’s 300+ articles are posted at EllenBrown.com. She also co-hosts the podcast “It’s Our Money” on PRN.FM and podbean. She is a Fellow of the Democracy Collaborative and has degrees from UC Berkeley and UCLA School of Law.
Max Jerneck, researcher at the Swedish Think Tank Katalys. He is focused on full employment, industrial policy and the climate transition. He was previously at the Stockholm School of Economics and has a Ph.D. in sociology from Lund University.
John Howell, Ph.D., has been involved for more than a decade with the American Monetary Institute and the Alliance For Just Money, particularly with revisions of the National Emergency Employment Defense Act, introduced into Congress in 2011, into its successor, the proposed American Monetary Reform Act. He has also been active in
bringing the need for monetary reform to other audiences including the League of Women Voters and the Religious Society of Friends.
After the panel discussion, we conclude with questions from the audience.
References
Hockett, R.C. (2024) Spread the Fed: Distributed Central Banking in Pandemic and Beyond. Cham: Springer International Publishing. Available at: https://link.springer.com/book/10.1007/978-3-031-72051-2.papers.ssrn.com+1SpringerLink+1
Hockett, R.C. (2022) The Citizens' Ledger: Digitizing Our Money, Democratizing Our Finance. Cham: Springer International Publishing. Available at: https://link.springer.com/content/pdf/10.1007/978-3-030-99566-9.pdf.SpringerLink
Hockett, R.C. (2020) Financing the Green New Deal: A Plan of Action and Renewal. Cham: Springer International Publishing. Available at: https://link.springer.com/book/10.1007/978-3-030-48450-7.
Historic opportunity
Central bankers, academics, monetary reformers, and policymakers around the world are currently discussing the problems and risks of the current monetary system and exploring new approaches to creating money. Citizens have a historic opportunity to influence and ensure that money creation is organised in a fair and sustainable way. That's why we are organizing courses and seminars on the subject. Sign up and feel free to invite friends and acquaintances.
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The International Movement for Monetary Reform (IMMR) consists of non-profit organizations that focus on the most critical issue of our time - the creation and disappearance of money and its consequences for the development of society and our lives.
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