Ellen Brown
JULY 16, 2026

Discussions of artificial intelligence typically begin with the question, What happens when the machines take our jobs? For thousands of years, work has been the means by which we fed our families, earned our place in society, and gave structure to our lives. We have come to equate paid employment with identity.

That presumption may soon be obsolete.

When Elon Musk proposed replacing Universal Basic Income with what he calls a Universal High Income—a level of income sufficient for everyone to live comfortably while intelligent machines produce much of the goods and services society requires—critics warned that people would become lazy. They would stop pursuing college degrees, stop starting businesses, stop inventing, stop contributing. Without jobs, it was argued, life itself would lose meaning and purpose.

Interestingly, humanity’s oldest written history begins with the premise that the purpose of humans is to work. The earliest known writing was impressed into clay tablets in ancient Sumer more than five thousand years ago. The Sumerian Atrahasis tablets tell of sky-deities called Annunaki, cast in modern “ancient architect” scenarios as extraterrestrial engineers. The heavy labor required to maintain life on earth was delegated to junior gods called Igigi, who finally grew weary of the arduous work, laid down their tools and rebelled.

The remedy was to create a new being to carry their burden. This was done by genetic manipulation to upgrade the highest life form found here, creating the human species. Whether we read that as history, allegory, or mythology, its underlying message is that humanity was conceived as a labor force – and human civilization begins with a control system to manage the laborers.

The first writing was not poetry or philosophy. It was accounting: grain tallies, labor quotas, rations, obligations. Most of the original cuneiform tablets were administrative records. What began as an exchange system evolved into a money system to control work and the workers performing it. For nearly six thousand years, human worth has been measured by our productivity. We deserve food and shelter because we worked for it.

In many respects, life is still organized around compulsory labor. Writing was devised to organize it. Accounting on clay tablets predated the use of coins, managed by temple priests as intermediaries for the gods. The temple evolved into private banks, with bankers intermediating commerce.

In the 1930s, British economist and philosopher John Maynard Keynes predicted that by the end of the twentieth century, technological advancement would reduce the work-week to just fifteen hours. So why is the forty-hour work week still the norm? It has been argued that our current economic structure uses “busyness” as a form of social containment. By tethering survival to forty hours of corporate or administrative labor, the system ensures that the majority of human creative power is spent serving institutional interests rather than personal or community liberation.

That may be why modern life feels increasingly saturated with what anthropologist David Graeber termed Bullshit Jobs in a book of that name—pointless administrative tasks that serve little social purpose, but that keep people too exhausted to pursue their own interests. He argued that the rise of “fake” work is a political device to keep people from having the free time to organize or rebel. But if artificial intelligence takes over the majority of production, that changes the meaning of work.

From Scarcity to Abundance.

For centuries, scarcity shaped human behavior. Scarcity taught people to guard, to compete, to fear loss. But abundance changes the emotional landscape. What happens if we are simply handed what we need to survive? Skeptics say people will stop working and learning, that society will collapse into idleness, that life will lose meaning without jobs. But pilot studies of Universal Basic Income (UBI) programs involving unconditional cash transfers to recipients show otherwise.

UBI studies from around the world have shown positive results from UBI payments, including higher employment, lower crime, better mental health, higher graduation rates, and little evidence of a retreat from productive activity. Relieved of the constant anxiety of maintaining survival, participants typically pursue education, care for family members, search for better jobs, or start businesses they would not have dared to take on if failure meant destitution. It seems that necessity is not the only mother of invention.

Granted, the payout in most U.S. studies was a marginal $500 or $600 per month, only enough to provide a safety net for basic food and shelter. Plenty of motivation was left to add income for the finer things in life. Studies of the effects of a Universal High Income of $50,000 or more per year have not been done. But many people who are no longer working for pay, either because they are retired or because they have an inheritance or investments to live on, volunteer their time for socially beneficial causes.

Parents devote extraordinary energy to raising children without receiving a paycheck. Volunteers spend countless hours building community organizations. Amateur musicians practice difficult instruments for years with little expectation of financial reward. Scientists have pursued questions that fascinated them long before the result was likely to be commercially valuable. Thousands of programmers worked without pay to develop Linux open source software, and editors work for free to produce Wikipedia, just for reputation, community and the satisfaction of solving hard problems. These activities are not work for wages, but they are work that is quite meaningful to the people engaged in them.

The Enlightenment: Largely the Legacy of the Leisure Class.

The intellectual triumphs of the European Enlightenment—the era that birthed modern science, political liberty, and the social contract—were primarily the domain of a wealthy leisure class, or of talent that was financially backed by institutional support (church, courts, universities) or personal patronage.

Sociologist Thorstein Veblen laid out this thesis in The Theory of the Leisure Class (1899). He argued that scholarly pursuit functioned as a form of “conspicuous leisure”—a way to demonstrate financial strength by engaging in activities that were “unproductive” in the immediate economic sense. To spend decades debating the nature of sovereignty or the movement of the stars required a measure of “unearned increment” or rent extraction. Examples included:

Francis Bacon (1561–1626): As Lord Chancellor and a member of the high nobility, Bacon’s scientific methodology was fueled by the resources of the state and inherited status.

Robert Boyle (1627–1691): The father of modern chemistry was the son of the “Great Earl of Cork,” then the wealthiest man in the British Isles. His work was conducted as a “gentleman scientist” with no need for professional employment.

Antoine Lavoisier (1743–1794): Lavoisier funded the world’s most advanced chemical laboratory through his role as a “Tax Farmer” for the French crown—a position of pure financial extraction.

For those not born into the elite, intellectual survival usually required “aristocratic patronage.” John Locke’s influential work was made possible by his residency and support from the Earl of Shaftesbury, while Thomas Hobbes was a lifelong dependent of the Cavendish family. This system ensured that even “revolutionary” ideas were filtered through the lens of those who benefited most from the existing social hierarchy.

The irony is that the very thinkers who theorized about “universal human rights” and “liberty” did so from a position of security provided by the systems of land-rent and debt-extraction they were analyzing. To create truly universal “liberty” requires a secure income for all.

Non-compulsory Education.

For over a century, schools have functioned as labor factories, designed to produce compliant workers for industrial economies. If labor is no longer the center of life, education must change as well. AI already performs memorization and standardized tasks better than humans, relieving us of the need to perfect those skills ourselves. But that does not mean there is nothing left to learn. Studies of “Self-Directed Education” or “Unschooling” suggest that children are biologically wired to learn, and that removing the coercion of traditional schooling leads not to ignorance but to highly motivated, specialized learners. Self-directed education produces young adults who retain their curiosity and creativity, develop emotional intelligence, and pursue mastery for its own sake.

A 2013/2014 survey of 75 unschooled adults conducted by educational psychologists Peter Gray and Gina Riley found that 83% went on to some form of higher education. Despite not having a high school diploma, they reported little trouble getting into college, often using portfolios, interviews, or community college credits to bridge the gap. A high percentage of unschoolers pursued careers in the creative arts or became entrepreneurs. The researchers reported that unschooling helped them develop the self-reliance and out-of-the-box thinking required for these fields.

A South African study found that while “unschooled” students may have followed non-traditional paths, they often achieved high levels of professional success, particularly in creative and entrepreneurial fields. Intrinsic curiosity replaced extrinsic rewards (grades or job requirements) as the primary driver for learning.

Research on children who learn to read through unschooling shows wide variance in when they start (anywhere from age 4 to 14), but once they decide they want to read, they often reach grade-level proficiency in a matter of months rather than years because they are personally invested. Proponents argue that traditional schooling actually stifles learning by making it a chore.

The Sudbury Valley School model (founded in 1968) is a radical form of democratic education based on the belief that children are naturally curious and capable of managing their own learning. In a Sudbury school, there are no grades or required classes. Instead, students of all ages (5–18) mix freely and decide for themselves how to spend their time. Long-term studies of graduates show that they overwhelmingly transition successfully into higher education and careers, often citing the school’s emphasis on responsibility, self-direction, and democratic participation as the primary drivers of their adult success.

Self-directed learning doesn’t require an independent income, but the point is that the drive to learn and to apply that education to useful pursuits is an inherent human trait, in both children and adults. It’s something we want to do and will do, whether or not an employer requires it.

Self-actualization and Maslow’s Hierarchy of Needs.

American psychologist Abraham Maslow conceptualized the needs or goals that motivate human behavior in a clinical review in 1943. He argued that once physiological and safety needs are met, humans naturally move toward “Self-actualization” – the realization of personal potential and pursuit of creative activities. In his later years, Maslow added a level above self-actualization called “Self-transcendence”, where people focus on goals outside themselves (altruism, community and caregiving).

That natural evolution can be applied not just to individuals but to civilizations. As AI and robotics free us from the self-centered needs of survival, we can awaken to our larger purposes of collective actualization and harmonious progress.

Escaping the Welfare Trap.

That’s the promise of AI – that it can free up our time so that we can escape the meaningless “busyness” of paid labor and pursue goals more meaningful to ourselves. But the same digital tools have a darker side. Catherine Austin Fitts and other critics warn that AI could become the ultimate “digital panopticon”—a weapon of entrapment by which programmable money and algorithmic surveillance create a modern “golden cage” in which the right to receive “welfare” is tied to political compliance. The UBI thus becomes a tool of coercion.

The same technology, however, offers tools to avoid that trap. Decentralized, neutral identity systems and zero-knowledge proofs allow people to establish that they are unique humans without revealing personal data. Zero-knowledge proofs are a cryptographic method by which one party can prove to another that a statement is true without revealing any additional information. A neutral protocol is one in which the rules are transparent, fixed, and cannot discriminate against specific users. By using “Smart Contracts” on a blockchain, the distribution of UHI becomes automated. The code only checks if the user has a valid, unique identity proof. It cannot check the user’s political party, criminal record or social behavior (unless explicitly part of the code). A government-issued digital currency could also be generated using the privacy-protected, peer-to-peer models of Project Hamilton and the ECASH bill, as detailed in Part 3 of this series.

Those are political decisions, dependent on a democratic system governed by and for the people. Mandating that these tools be incorporated into any government payments system can ensure that UHI remains a right of existence rather than a reward for obedience.

If AI can handle production, it removes the original justification for compulsory labor. The choice is whether we use AI to automate our enslavement or to finally automate our exit from the Sumerian story, transforming ourselves from a managed labor force into a self-directed, creative civilization.

Rewriting the Human Story.

For six thousand years, humanity has lived inside the Sumerian story: we were created to work for external masters. But AI has brought us to the point where labor no longer must be our master. AI abundance is not the end of work but the beginning of choice, and choice is the beginning of meaning.

Our first choice must be to insist on a democratic government run in the public interest, and a financial system that supports independent endeavor. Freeing humanity from compulsory labor can then provide the freedom for us to develop more fully as human beings.

Some people will create art. Some will teach. Some will explore science, history, biology, or engineering. Some will build communities. Families may simply become more present with each other. For the first time in history, large numbers of people may have the time and stability to ask the deeper questions about the meaning of life and the unique purpose of their own lives.

In the new story that emerges, we can see ourselves not as laborers but as musicians. We can make beautiful music together, but we need the other instruments. An orchestra is beautiful because each instrument contributes its unique voice to a larger harmony. The promise of AI is to free us from compulsory labor so that we can explore our own unique gifts and discover the music only we can play.

Be sure to check Ellen Brown’s earlier posts here on the AI Abundance Paradigm.

Originally published on Scheerpost.com.

Shared via Creative Commons.

ELLEN BROWN
June 26 2026

As Americans prepare to celebrate the 250th anniversary of the Declaration of Independence, few are paying attention to a bill moving through Congress that could seriously impinge on our financial independence.

The Clarity for Payment Stablecoins Act, H.R. 4766, is slated to make privately issued stablecoins a major component of the U.S. monetary system. Supporters see stablecoins as a way to strengthen the dollar’s global role while creating a vast new market for U.S. Treasury securities. Critics see the rise of programmable private money that can be monitored, frozen, or restricted by its issuers. Banks fear the loss of the deposits that are essential to advancing affordable credit. What appears to be a debate about digital tokens has thus become a battle over the future of banking itself and finance.

Why Stablecoins Matter.

Stablecoins are privately issued digital tokens that can circulate on blockchain networks independently of the banking system. They are designed to maintain a stable value, typically one dollar per token. Unlike Bitcoin and other cryptocurrencies, whose values fluctuate wildly, stablecoins are usually backed by reserve assets such as cash and short-term U.S. Treasury securities.

Their growth has been explosive. The stablecoin market now measures in the hundreds of billions of dollars and continues to expand rapidly. Advocates see them as the next stage in the evolution of money: faster, cheaper, available around the clock, and capable of moving across borders without relying on traditional banking networks.

For users in countries suffering from inflation, currency controls, or banking instability, dollar-denominated stablecoins can function as digital dollar savings accounts. Residents of Argentina, Turkey, Nigeria, and other countries may trust a Treasury-backed dollar token more than their own national currency. In some countries suffering from inflation, merchants quote prices in dollar stablecoins and accept them directly through mobile apps.

The Push from Cryptocurrency Advocates: Ending “Regulation by Enforcement”.

The stated goal of the CLARITY Act is to establish a statutory framework that clarifies whether digital assets are securities, commodities, or payment stablecoins. Before this legislation, regulators—primarily the SEC—often applied decades-old laws to modern blockchain technology. Because the rules weren’t explicitly written for crypto, companies would discover they were in violation only when they were served with a lawsuit or a fine.

The most prominent example is SEC vs. Ripple Labs. Ripple launched its XRP token in 2012 and operated for nearly a decade without specific guidance that its token was considered a security. In 2020, the SEC sued Ripple, alleging they had been selling unregistered securities for years. Ripple was forced into years of litigation and hundreds of millions in legal fees to determine if a rule applied to them retroactively.

The CLARITY Act, alongside the GENIUS Act (which focuses on stablecoins), represents a shift from “Regulation by Enforcement” to “Regulation by Guidance,” where firms have a clear rulebook to follow before they launch products rather than waiting for a subpoena to understand their legal status.

The Government’s Interest.

he push for passage of the Clarity Act has come not only from crypto advocates but from policymakers, because every stablecoin backed by Treasury securities creates another buyer for U.S. government debt. Treasury Secretary Scott Bessent has embraced stablecoins as a means of strengthening the dollar’s global role. The Treasury Department projects that the stablecoin market could eventually reach trillions of dollars. If that happens, stablecoin issuers could become some of the largest buyers of Treasury bills in the world, helping to replace losses from those central banks that have been “de-dollarizing” by selling their reserves of U.S. debt.

Another advantage of stablecoins from the government’s perspective is their ability to reassert U.S. monetary sovereignty over the eurodollar market — the massive, offshore market where dollars are created through bank lending without direct oversight from the Fed. This is a complicated subject for a later article, but the bottom line is that by shifting global demand from uncollateralized eurodollar bank promises to tokens backed 1 to 1 by U.S. Treasuries, stablecoins effectively force privately-issued offshore dollars back onto the U.S. government’s balance sheet.

Promise or Threat? 

Those are some of the upsides, but stablecoins are not neutral payment tokens. Part 3 of this series discussed Project Hamilton, which showed what a public digital dollar could look like — fast, privacy-protected and democratic. The stablecoin system rising in its place looks very different. It is private, not public; programmable, not cash-like; surveilled, not anonymous.

Every stablecoin transaction is permanently recorded on a public blockchain. Tokens can be frozen, seized, or destroyed. Users can be blocked. Circle (USDC) maintains a blacklist function and has frozen addresses at the request of law enforcement or at its own discretion. Tether (USDT) has frozen billions of dollars’ worth of tokens across thousands of addresses. PayPal’s PYUSD includes explicit “freeze” and “wipe” functions in its smart-contract code.

This is the sort of “programmability” that CBDC critics fear – the ability to embed code into the money itself, causing it to execute transactions automatically when specific conditions are met. In fact, stablecoins could potentially be more invasive than a CBDC, since private issuers are not subject to the constitutional obligations imposed on the U.S. government by the 4^th and 5^th Amendments. In a June 23, 2026 podcast, Catherine Austin Fitts, former Assistant Secretary of Housing and Urban Development, called stablecoins “much more terrifying than CBDCs because you have complete non-accountability.” Private stablecoins operate via private contracts and “terms of service” that often bypass traditional due process. They can embed algorithmic terms that are enforced automatically, without recourse to a court or even a human teller.

A Digital Gold Mine for Issuers.

Under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), passed in July 2025, stablecoins must be backed 1 to 1 with dollar collateral. That collateral can take various forms, but stablecoin issuers typically maintain their reserves in highly liquid, short-term instruments—primarily 3-month U.S. Treasury Bills—to ensure they can satisfy redemptions quickly. As of June 18, 2026, the 3-month Treasury yield is 3.83% (down from 5%+ in 2024-25).

Stablecoin issuers make huge profits under this arrangement. The issuer sells stablecoins, uses the proceeds to buy Treasuries, and keeps the interest. Tether, the largest stablecoin issuer, has achieved a market cap of $120 billion with a staff of only about 50 employees. It reported a record-breaking net profit of $6.2 billion for the full year of 2023, and quarterly profits reaching $4.52 billion in Q1 2024 alone. A significant portion of this income is derived from its massive holdings of U.S. Treasuries, estimated at over $100 billion.

Particularly controversial are the stablecoin and crypto businesses of the president’s own family, and the potential conflicts of interestinvolved.

Who Should Receive the Interest – Private Middlemen or the Public?

Cornell Law professor Robert Hockett proposes a different model. He suggests that TreasuryDirect accounts could function as digital wallets, allowing individuals to hold Treasury-backed digital dollars directly and receive the Treasury yield themselves rather than through private intermediaries.

It is a promising idea, but it would require major changes to the existing financial architecture to preserve the credit system now managed by the banks. For more on Prof. Hockett’s proposals, see Digital Greenbacks: A Sequenced ‘Treasury Direct’ and ‘Fed Wallet’ Plan for the Democratic Digital Dollar and The Citizens’ Ledger: Digitizing Our Money, Democratizing Our Finance.

The Issue of Yield and Deposit Flight.

This is also the major concern of the banking establishment with the pending Clarity Act. A provision allowing stablecoin issuers to pay their customers “rewards,” considered the equivalent of yield or interest, could suck away their deposit base. Issuers collecting nearly 4% interest on their Treasuries could pay rewards of 2% or 3% to investors and easily outcompete banks paying 0.1 or 0.2 percent on deposits. Banking-industry estimates of potential deposit flight into stablecoin platforms range from $65 billion to over $1 trillion, with some analysts warning that in a fully developed stablecoin system, as much as $6 trillion could migrate out of the banking system.

But wait: if banks can create deposits on their books just by making loans, as the Bank of England has confirmed, why are deposits so important to them?

This is another complicated subject for a follow-up article, but the bottom line is that while a bank can create deposits, it cannot create the “reserves” necessary to transfer the loaned funds out of the bank. Deposits created when a bank makes a loan are a liability of the bank – its promise to pay on demand. What it pays with are reserves, which only the central bank can issue – either as vault cash (coins and dollar bills) or as digital reserves held in a “master account” at the Fed. The reserves are the payment rails for transferring deposits, and the cheapest way for banks to get them is through deposits transferred from other banks.

Deposits are thus considered the lifeblood of banks, and we need banks for our credit requirements. Stablecoin issuers don’t create new dollars or extend credit. They just tokenize existing dollars drawn from chartered banks, invest them in government securities, and keep the interest. Banks are the only institutions that create credit for the real economy.

If deposits leave the banking system, lending capacity shrinks; and the most vulnerable institutions are the community banks that extend credit to local businesses. Megabanks have other ways to acquire cheap reserves, including the repo market and the Fed discount window. Community banks rely heavily on incoming deposits to provide the reserves to move their loans, and they cannot compete with stablecoins in attracting deposits because they have substantially higher costs than issuers working with algorithms in the cloud.

Why We Need the Community Banks That Stablecoins Could Undermine.

Richard Werner, Prof. of Economics at the University of Winchester in the UK, argues that community banks are particularly important for economic growth. Large banks prefer large deals with large customers. A banker can spend time arranging a billion dollar transaction for a hedge fund or private equity firm, or spend the same time processing dozens of small loans to local businesses. Small and medium-sized businesses today account for the majority of jobs; and without community banks, they often struggle to get the financing to adopt new technologies and expand production.

Werner points to the German model, where small businesses typically work with local community banks, cooperative banks, and savings banks that lend only within their local areas. Because the bank and its customers share the same economic fortunes, the banks have an incentive to support local productive enterprises. When a business identifies a promising investment opportunity, it can present its plan to a local bank that already knows the company and understands the local economy. Funding decisions can sometimes be made within days, allowing firms to adopt new technologies quickly and remain globally competitive.

The result, he says, is visible in Germany’s remarkable number of “hidden champions”—small and medium-sized firms that nevertheless rank among the top companies in the world within their specialized market niches. Germany’s success, Werner argues, is closely tied to the fact that roughly 80 percent of German banks are small local institutions that lend locally.

Werner extends the same argument to China. After coming to power in 1978, Deng Xiaoping sought to improve economic performance by decentralizing credit allocation. Rather than relying on a handful of central planners to determine where financing should go, China created thousands of local banks, village banks, cooperative banks, and regional institutions. The result was a vast network of local loan officers making lending decisions based on local knowledge. Werner contrasts “five central bankers” making decisions with “five million loan officers” evaluating opportunities throughout the country. He argues that this decentralized approach played a crucial role in China’s sustained high growth and poverty reduction over the following four decades.

The same has been true in the United States, which had a record 30,456 banks in 1921. Today, however, that number has shrunk to only 9,082 insured financial institutions (banks and credit unions). Small banks have had to merge with much larger banks to stay solvent, largely due to higher regulatory costs and the competitive pressure of the megabanks.

Werner observes that bank size also affects where credit is directed. A banking sector dominated by a few large institutions tends to channel credit toward financial speculation and large corporate borrowers. A banking system composed of many small local banks tends to channel newly created money toward productive local enterprises. When credit goes into new technologies, equipment, and productive capacity, the result is to increase output, employment, and sustainable economic growth without triggering inflation.

Werner concludes that if governments want stronger productivity growth, more small-business formation, greater regional prosperity, and less inequality, they need to encourage the creation of local community banks and adopt a lighter regulatory regime for smaller institutions.

Productivity and the Burgeoning Federal Debt.

Economic growth is also particularly important for dealing with the federal debt. Stablecoins may help finance the debt, but they do not shrink it. They just fill some of the gap left by the People’s Bank of China and other central banks that have been selling U.S. Treasuries. The unsustainable $1.2 trillion interest tab must still be paid and continues on its exponential upward growth trajectory.

Treasury Secretary Scott Bessent has argued that the U.S. can “grow our way out of the debt” by increasing production and expanding the economy faster than the debt grows. President Trump has similarly argued that economic growth can reduce the relative burden of the national debt, much as occurred after World War II.

The federal debt exceeded 100% of GDP at the end of the war. But the debt burden gradually declined as the economy expanded faster than the debt, shrinking the debt-to-GDP ratio. And for that sort of growth in today’s economy, preserving the viability of community banks is essential.

Currency Backed by Debt or Productivity?

As artificial intelligence and automation replace jobs while dramatically increasing productive capacity, however, policymakers may one day question whether money must be issued against debt at all – or whether some portion of it could be issued directly against the productive capacity of the economy itself.

That is not a new idea. In fact it represents a return to our revolutionary roots. It was how the American colonists broke free of the “British system” that exploited the colonies for the production of commodities. Rather than relying on foreign currencies, the American colonial governments paid for goods and services with paper scrip they issued themselves. When the king banned that practice, the colonists rebelled – and they won.

Abraham Lincoln used the same funding mechanism to avoid usurious interest rates from British-backed banks that would have re-colonized the States by debt. He paid for the Civil War effort and major national infrastructure with government-issued Greenbacks (U.S. Notes).

When these government notes exceeded the production of goods and services, the supply and demand curve was skewed toward price inflation. But in a world of AI abundance, the curve will tilt the other way – toward too little money chasing too many goods and services. In an economy of that sort of unprecedented productivity, the government will need to issue new money just to balance the scales. And this money will need to be paid to the consumers who will buy the products, not only to close the wealth gap but to provide the demand to absorb the hyper-abundant supply.

Thus this series comes full circle, to the need for a “universal high income” or “sovereign wealth dividend” to solve an AI-induced unemployment crisis – and for a government-issued digital currency to fund it, built on the cash-like, privacy-protected model of Project Hamilton and the ECASH Act.

Be sure to check Ellen Brown’s earlier posts here on the AI Abundance Paradigm.

First published on Scheerpost.com.

Shared via Creative Commons.

Project Hamilton, ECASH, and the Quest for a Privacy-Protected Digital Dollar

 Ellen Brown
JUNE 12, 2026

The first two articles in this series explored the proposition that artificial intelligence and robotics will soon be ushering in an economy of unprecedented abundance, and examined the resource and energy constraints that could limit that voluminous growth. If machines eventually replace most of the workforce, society may need some form of Universal High Income (UHI), as Elon Musk and others have suggested, simply to keep purchasing power aligned with productive capacity. In a world where goods and services can be produced in abundance, the challenge may no longer be creating supply. It may be creating enough consumer demand (money) to purchase that potential supply.

A UHI or UBI (Universal Basic Income) would have to be issued digitally by the government. This third article addresses the fear that such a currency would come with strings attached – that it could be programmed to restrict purchases, limit movement, or enforce political conformity, imposing a “digital prison.”

The question posed here is, could a government-issued digital currency be created in a way that is privacy-protected, not programmable, and tradable like cash?

The answer is that it could. In fact, between 2020 and 2022, such a public digital-dollar system was in development. Project Hamilton, a collaborative effort of the Boston Fed and MIT, created a digital dollar that stored no personal data or transaction history, was not programmable to control how the money was spent, could be used without an intermediary, and was also the fastest payment system ever built. It was a digital money design that made a financial control grid impossible.

In late 2022, however, the program was quietly shelved – not because of a failure of design, but because it was thought to threaten the business models of banks and private payment networks. That was the belief, but a public money system built with Hamilton-style digital dollars could actually strengthen local banks, as will be shown here.

Why does all this matter? Congress is currently debating legislation that could make privately issued stablecoins a major component of the future dollar system. Supporters, including Treasury Secretary Scott Bessent, see Treasury-backed stablecoins as a way to strengthen the dollar and create new demand for U.S. government debt. Banks worry that if stablecoins are allowed to pay competitive yields, depositors could move their money out of traditional bank accounts and into digital wallets. But both sides share a common assumption: that future digital dollars must be backed by government debt. There is another possibility—a privacy-protected, non-programmable digital dollar issued directly by the Treasury and designed to function like cash.

The irony is that the privately-issued stablecoins now being implemented by Congress actually are programmable and do threaten the business model of private banks. That subject in order will be explored in a follow-up article. This article will look at the non-programmable alternative that was demonstrated and then abandoned, and at how it could be the only mathematically viable alternative for funding a UHI, if or when that option becomes necessary to maintain economic stability.

The Digital Control Grid We Already Have.

For years, the loudest warnings about a central bank digital currency (CBDC) have centered on the fear that a government-issued digital dollar would create an unprecedented surveillance system. However, a surveillance system is already built into the digital money we use today. Hamilton-style digital dollars could have bypassed that invasion of privacy.

More than 95 percent of the money supply is now digital, and the payment rails it runs on — Visa, Mastercard, PayPal, Stripe, Zelle, the major banks — already track what you buy and where you buy it. Every purchase is tagged with a merchant category code (MCC), which forms a detailed behavioral map of your life. Behind the scenes, companies like Plaid and Yodlee sit between your bank and the apps you use. When you connect a budgeting or payment app, these intermediaries often copy years of your transaction history — every pharmacy purchase, every restaurant bill, every utility payment. They store it, analyze it, and build profiles of your spending habits that can be shared or sold.

Payment processors use automated systems to flag and sometimes freeze accounts based on activities designated as suspicious by algorithms. PayPal’s Acceptable Use Policy, for example, allows it to seize funds for a wide range of activities defined by the company. These decisions are made under corporate policies buried in complicated fine print that few people actually read, policies executed by the company without due process or a clear right of appeal.

Project Hamilton, the Privacy-protected Alternative that Was Shut Down.

In contrast, under Project Hamilton a public digital-dollar system was built, tested and proved that could have blocked surveillance, protected privacy, and given Americans a cash-like digital option. Developed by the Federal Reserve Bank of Boston and MIT’s Digital Currency Initiative, Project Hamilton was a working prototype. Phase 1 delivered something no private payment network has ever offered: 1.7 million transactions per second, with settlement in under a second, no personal data stored on the ledger, no transaction history, no account numbers, and no surveillance architecture.

Instead of numbered accounts, it used opaque 32-byte hashes — a fixed-length string of 32 bytes that is cryptographically generated, random-looking, and impossible to link to a person or decode into meaningful information. It might look something like this: 0xA3F9C1E4B7D2F8C9E1A4F3B2C7D9E0F.

The system validated payments without knowing who was making them, and identity checks happened outside the transaction layer, meaning the core ledger never touched personal information. MIT released the entire codebase publicly, so that anyone could inspect it and verify that it was designed to protect users, not monitor them.

In short, the United States successfully built a digital dollar that was fast, private, and not traceable to the user.

In a 2023 report in the MIT Technology Review titled “Is the Digital Dollar Dead?”, Mike Orcutt wrote, “Hamilton’s first phase demonstrated a feasible technical approach, and the researchers promised a ‘Phase 2’ that would explore sophisticated approaches to privacy. But late last year, shortly after the project came under scrutiny from anti-CBDC legislators, the Boston Fed ended Hamilton.”

The Independent Community Bankers of America warned that a CBDC “could destabilize the existing banking system that serves as the backbone of the U.S. economy.” Members of Congress sent letters to the Boston Fed expressing concern that Hamilton’s architecture could bypass commercial banks entirely. Orcutt wrote that CBDC research suddenly became “political red meat.” Bills were introduced to ensure that a digital dollar “never sees the light of day.” And in 2022, the Boston Fed quietly ended the project.

Opponents of developing a U.S. CBDC questioned the need for it. They argued that dollars are already digital. You can pay with a debit card or credit card.

In response, Orcutt quoted Willamette University law professor Rohan Grey, who observed that  5.9 million U.S. households are “unbanked” and limited to using cash, and cash won’t work on Amazon and other online shopping outlets. He added that the non-traceability of cash is a “social good” that needs to be preserved as we transition to a digital world.

The ECASH Act: A Treasury-issued Digital Dollar.

In 2022, Grey helped author a U.S. House bill called the Electronic Currency and Secure Hardware Act (ECASH). Introduced by Rep. Stephen Lynch of Massachusetts, the legislation directs the Treasury to create and issue a digital dollar that functions like physical cash. According to the ECASH Act Fact Sheet:

“The bill mandates several e-cash features, e.g.:

• Legal Tender: E-cash must be legal tender, created and issued into circulation by Treasury, and payable to bearer.

•Financial Inclusion: E-cash must be distributed and used directly by the American public via widely available hardware devices. It must also be capable of peer-to-peer, offline transactions and interoperable with all existing financial institution and payment provider systems. Moreover, in developing e-cash, the Security must prioritize technologies that promote universal access and usability – particularly as relating to  individuals with disabilities, low-income individuals, and communities with limited access to internet or telecommunications networks.

• Privacy: E-cash must incorporate key security and functionality safeguards that are generally associated with the use of physical currency – including anonymity, privacy, and minimal generation of data from transactions. E-cash must also be distributed through secure hardware devices that are secured locally via cryptographic encryption or other similar technologies and cannot contain personal identifiable information or be subject to surveillance, transactional data collection, or censorship-enabling features.  “

Grey envisioned cards that could be tapped together or to smart phones to transfer value anonymously, online or off-line. That such an “ecash” system would work was demonstrated in the 1980s and became available through Credit Suisse in Switzerland in 1998, then through Deutsche Bank in Germany and other banks in Europe, where cash is more often used than in the United States.

The U.S. ECASH Act has not yet been passed, but it is still alive. It is a minority-party bill in a Republican-controlled House that has never passed committee, but it has been reintroduced in subsequent sessions of Congress, including the current 119^th Congress.

The Public Option – Still on the Table?

Another bill that has not yet passed – H.R. 1122, the CBDC Anti-Surveillance State Act – would prohibit the Federal Reserve from issuing a retail CBDC, ever. But even if that bill passes, there is a public option that is still available. A modern Greenback could be issued through the Treasury, the fiscal arm of the government, rather than through the central bank. This is what is mandated in the ECASH Act – Treasury-issued digital currency.

Far from a new idea, government-issued currency is actually the oldest American monetary tradition we have, dating back to the American colonists and Abraham Lincoln. During the Civil War, the United States had no Federal Reserve, no central bank and no lender of last resort. But it did have a Treasury, and the government was facing an existential crisis. To finance the war without crushing the economy with debt, the Lincoln administration issued Greenbacks: Treasury-created dollars that required no borrowing and paid no interest. They were sovereign, debt-free, interest-free, and issued directly into circulation.

Greenbacks (U.S. Notes) kept the Union solvent, stabilized prices, and funded the war effort as well as a great deal of national infrastructure. They showed that the Treasury can issue money directly when the public interest requires it.

A modern version of that option, a Treasury-issued digital dollar, is not only possible under the Constitution and pending ECASH Act; but if we are heading into an AI-driven economy where Universal High Income becomes necessary to maintain consumer demand, Treasury issuance may be the only model that makes mathematical sense. Treasury-backed stablecoins and the Fed’s Quantitative Easing are both debt-based. With stablecoins, the interest on the Treasuries flows to private issuers. With the bank reserves the Fed issues to buy Treasury debt from banks, the interest flows to the banks. With Treasury-issued dollars, government interest flows to no one, because the government owes it to no one. This is the cleanest, most democratic form of money creation, and it falls squarely within the American monetary tradition.

The age-old objection to that solution is that it would devalue the currency and inflate prices from too much money chasing too few goods. But in an age of unprecedented AI-generated abundance, that maxim would be turned on its head. When too little money is chasing too many goods, the system actually needs an infusion of new money in order to maintain economic balance.

A Public Payment System that Preserves Private Local Banking and Serves the People.

How would Treasury dollars reach consumers, and how would they connect to community banks?

One possibility is through postal banks. The United States once had a very popular postal savings system, and Japan still has one. Japan Post Bank, one of the largest deposit-taking institutions in the world, provides universal access, simple accounts, basic payments, and a public option for savings. Yet it coexists with private banks, which continue to make loans and serve as the credit engines of the economy.

A U.S. postal banking system could do the same. The Postal Banking Act is a legislative bill reintroduced in 2022, aimed at re-establishing basic financial services at the United States Postal Service (USPS). Championed by lawmakers including Senators Kirsten Gillibrand and Bernie Sanders, the act seeks to provide safe, low-cost alternatives to predatory services like payday loans and check-cashing companies. According to Sen. Gillibrand, it could also generate nearly $19 billion per year for the USPS.

For a UHI, the Treasury could issue the digital dollars, and postal banks could distribute them. Balances above a modest threshold (say $500) could be automatically swept into the customer’s chosen community bank each night. Community banks would remain the lenders, keep lending local while ensuring universal access to public money. Local banks could have access to a public liquidity window through a state-owned public bank, similar to the Bank of North Dakota model.

To prevent fraud, the banks would also continue their function of monitoring large money flows, following the “two-tier” model in which banks handle the Know Your Customer (KYC) and AML monitoring envisioned in Project Hamilton’s documentation.

Conclusion: Stablecoins or Digital Greenbacks?

A stablecoin is a privatized claim on public debt, on which the U.S. government pays interest to the issuer. A Treasury-generated Greenback would be a public claim on public productivity, backed by “the full faith and credit of the United States” – the agreement of U.S. citizens to accept those Treasury-dollars in payment.

Treasury-issued digital dollars built on Project Hamilton architecture could support a UHI or UBI in an AI-driven economy without raising taxes or increasing the federal debt, and without the exponentially growing interest that leads to boom and bust cycles in a debt-based money system. If administered through a public banking model, a digital Greenback system could preserve community banks, provide universal access to the unbanked and under-banked, protect privacy, and keep monetary sovereignty in public hands.

Project Hamilton’s design was the opposite of the surveillance-heavy systems we use today. It used opaque 32-byte tokens that carried no personal information, a ledger that stored no transaction history, and a core that never saw names or account numbers. In other words, Hamilton would have been less programmable and more privacy-preserving than either the bank-created digital dollars Americans already use or the stablecoins being legislatively negotiated now.

Part 4 of this series will look more closely at the stablecoin legislation now pending, and at how that option can serve to strengthen the dollar’s reserve currency status abroad and ease the federal debt crisis without impairing the domestic lending business of local U.S. banks.

Be sure to check Ellen Brown’s earlier posts here on the AI Abundance Paradigm.

First Published on ScheerPost.com.

Shared via Creative Commons.

We face a choice. Tyranny or revolution.

CHRIS HEDGES
JUN 01, 2026

MEXICO CITY — There are two ways to confront global capitalism. There are mass movements, especially strikes, which disrupt commerce and government to force the ruling class to create systems of justice and equality — albeit ones where capitalists retain significant power.

The National Coordinator of Education Workers in Mexico (CNTE) — a grassroots union created in 1979 by dissident teachers — is currently attempting this in Mexico. It announced that if its demands for salary increases and job security are not met it will occupy public spaces and shut down the World Cup soccer matches scheduled to take place later this month in Mexico City.

When the teachers went on strike in the Mexican city of Oaxaca in 2006, following the incarceration and disappearances of union leaders, police fired on the protesters. The community rose up and drove the police out of the city. Oaxaca established an autonomous anarchist commune for several months. Although the commune was ultimately crushed by the Mexican government, the uprising spawned popular assemblies, independent media and empowered indigenous communities.

The second way to destroy capitalism is through the nationalization of industries and banks and the seizure of capitalist assets, although this can give rise to an equally pernicious form of state capitalism. This radical route entails, as in the Russian or Cuban revolutions, violence. Capitalists do not part with their monopolies on wealth and power peacefully. They orchestrate severe state and vigilante violence. They install dictators and fascists who abolish civil liberties, carry out mass arrests and criminalize even the most tepid forms of dissent.

Accommodating capitalists and their institutions, even with high taxation, regulation, strong labor laws and a prohibition of monopolies, means living amid a hostile force. It is a matter of time before this hostile force organizes to dismantle the social democratic state as happened in Sweden, Britain and Salvador Allende’s Chile.

Liberalism, which Rosa Luxemburg called by its more appropriate name — “opportunism” — is an integral component of capitalism. Liberalism ameliorates capitalism’s excesses. But capitalism, Luxemburg argued, is an enemy that can never be appeased. Liberal reforms blunt resistance, but later, when things grow quiet, are revoked. The last century of labor struggles in the United States provides a case study of Luxemburg’s observation.

Luxemburg also knew that socialism and imperialism were incompatible. Imperialism, which empowers a war machine designed to enrich arms merchants and global capitalists, is accompanied by a poisonous ideology — what social critic Dwight Macdonald in his 1946 essay “The Root Is Man” calls the “psychosis of permanent war” — which makes socialism impossible.

The psychosis of permanent war results, as it has in the U.S., in the curtailing of civil liberties and punishing economic austerity. Dissent is equated with treason. State power serves the dictates of empire rather than democracy, which devolves into farce, or in our case, a tawdry reality show.

The rollback of the New Deal, the closest we came to a social democracy, began in the mid-1940s. Cold War anti-communism and corporate opposition converged to make war on organized labor and the New Deal left. This assault culminated in the Second Red Scare.

In 1947, President Harry Truman’s Executive Order 9835 launched loyalty investigations that purged the left, including public-sector workers and union allies. That same year, the Taft–Hartley Act directly targeted organized labor by restricting strikes, secondary boycotts and union security agreements and by requiring union officers to sign anti-communist affidavits.

The left fell victim to what the historian Ellen Schrecker, in “Many Are the Crimes: McCarthyism in America,” calls “the most widespread and longest lasting wave of political repression in American history.”

Schrecker writes:

“In order to eliminate the alleged threat of domestic Communism, a broad coalition of politicians, bureaucrats, and other anticommunist activists hounded an entire generation of radicals and their associates, destroying lives, careers, and all the institutions that offered a left-wing alternative to mainstream politics and culture.”

This crusade, she goes on, “used all the power of the state to turn dissent into disloyalty and, in the process, drastically narrowed the spectrum of acceptable political debate.”

The witch hunts silenced communists, socialists, anarchists, pacifists and all those who denounced the abuses of empire and capitalism. The “anti-red” actions dealt devastating blows to the political health of the country. The radicals spoke the language of class war. They understood that Wall Street and the billionaire class are the enemy. They offered a broad social vision that allowed even the non-communist left to make sense of the predatory nature of capitalism. But once the radicals were purged, once the liberal class took government-imposed loyalty oaths and collaborated in the witch hunts for phantom communist agents, we were robbed of the ability to make sense of our struggle. We lost our voice. We were integrated into the corporate structures we should have been dismantling.

The ruling class justifies its pillage with the ideology of neoliberalism. Neoliberalism, as David Harvey points out, “had limited effectiveness as an engine for economic growth” but is successful as “a project to restore class dominance.” It transfers wealth upwards. It consolidates power in the hands of the billionaire class. It is an updated version of the divine right of kings.

Wages under neoliberalism stagnate. If the minimum wage kept pace with productivity, it would be at least $25 an hour.

Deindustrialization, turbocharged under Bill Clinton, sent industries overseas, where workers are paid slave wages and lack benefits. Some thirty million mass layoffs in the U.S. between 1996 and 2023, according to analysis by the Labor Institute, thrust the working class into economic misery. Margaret Thatcher and Tony Blair carried out the same assaults in Britain.

Ominously, accompanying this deterioration is the blocking of peaceful avenues for social change, including the Supreme Court’s 2010 Citizens United ruling, which effectively turned elections over to the billionaire class.

As social inequality has grown, so has state repression. We stand on the cusp of full-blown authoritarianism and fascism. If the Trump administration succeeds in rigging or invalidating the midterm elections, the last possible exit door within the political system will be slammed shut.

The evisceration of the rule of law at home is accompanied by the evisceration of the rule of law abroad. The U.S. Empire is a rogue state. It issues bellicose threats to all who defy it, braying like a wild animal. It carries out “preemptive” wars and imposes sanctions on nations that are defiant. It assassinates and kidnaps foreign leaders. It abducts foreign nationals and transports them to black sites where they are tortured and sometimes murdered. It uses its navy to seize merchant vessels and resell their cargo. It bombs nations in open violation of international law. It funds and arms Israel to carry out genocide. It ignores and humiliates its allies and alienates and enrages most of the global community.

This mounting oppression, advanced but not begun by Trump, means we face two stark choices. Tyranny or revolution.

I loathe violence, even when it is exercised in the service of what is seen as a just cause. No one escapes its poison. But it is the oppressor, not the oppressed, who determines the mechanisms of resistance.

The numerous revolutions and insurgencies I covered, including in El Salvador, Guatemala, Algeria, Bosnia, Kosovo and Palestine, saw nonviolent protests met with brutal state violence. Resistance movements had no option but to pick up arms.

The nonviolent revolutions I covered in Eastern and Central Europe succeeded not because they were nonviolent, but because the capitalist class benefited from them. The capitalists and oligarchs bought up state industries and assets, as they did after the collapse of the Soviet Union, at prices far below their actual value.

The global capitalists permitted the transition to power by the African National Congress (ANC) in South Africa if the ANC abandoned its Freedom Charter, which called for the nationalization of state industries and land redistribution. South Africatoday has the highest income inequality in the world.

Revolutions that enhance the wealth and power of the capitalist class thrive. Revolutions that do not see blood run in the streets.

We also face a dilemma earlier generations did not — the climate crisis.

The global ruling elites are determined to keep us chained to fossil fuels. They are determined to commodify and exploit the natural world, as well as human beings, to expand profit. They are determined to reconfigure our societies so workers are immiserated and shorn of all power while our masters live in unparalleled luxury and opulence.

The inevitable breakdown of the climate will make larger and larger zones, especially in the Global South, uninhabitable. The waves of climate refugees will become a flood. There will, in response, be no limit to the industrial violence used by the ruling global elites to protect their interests.

The genocide in Gaza is an unequivocal message sent from the industrialized nations of the north, which spent billions to sustain Israel’s mass slaughter, to a global population that subsists on a few dollars a day:

“We don’t care about humanitarian law. We don’t care about human rights. Your lives mean nothing to us. We will use any tool, including genocide, to protect our monopoly on wealth and power.”

What do we do? How do we resist? Can we halt this descent into madness and mass death?

I am not optimistic.

Those who live in the climate fortresses in the Global North have a material interest in this project, although we are all headed for extinction. Those in the Global North will, I fear, accept a species of totalitarian capitalism in exchange for a degree of security and stability, however temporary.

But this will not be true in the Global South where the ecological crisis and the rule of the global capitalist class pose an existential threat. The Global South will mount insurgencies and revolutions. It will replicate its rebellions of the past, some of which were successful, and some of which, including the insurgencies I covered in Guatemala, El Salvador and Algeria, were crushed.

Revolution, and the possibility of a world freed from the iron grip of global capitalism, will come from these acts of resistance. Let us hope they prevail.

First published on The Chris Hedges Report.

Shared via Creative Commons.

Ellen Brown
May 26, 2026

Part 1 of this “Abundance Paradigm” series discussed predictions that artificial intelligence and robotics will in the relatively near future produce an economy of extraordinary abundance – one in which most labor is automated. The contention of Elon Musk is that this development will require some form of government-issued “Universal High Income” (UHI) to provide the consumer demand necessary to keep the economy functioning in a world where machines do most of the work.

Based on those projections, I argued that if a UHI were to become necessary, it could not realistically be financed through taxes or debt alone, but would require some form of debt-free sovereign money issuance — a modern version of Lincoln’s Greenbacks. The usual objection to government-issued money is that it would drive up prices and devalue the currency due to “too much money chasing too few goods.” But in this case, we would have too many goods and not enough money to provide the consumer demand to move them off the shelves. A source of abundant new money would actually be needed to keep trade flowing.

Objections came thick and fast. Some critics saw the AI revolution not as liberation but as a technocratic nightmare: AI surveillance, programmable digital money and “smart cities,” centralized control systems, and a future in which most people will own nothing while a tiny elite owns the machines, the data, and even the government. Others challenged the underlying premises: Would AI really generate such extraordinary abundance? Would productivity rise enough to justify something like a UHI? Or is this simply another round of Silicon Valley hype detached from economic reality?

Those are legitimate questions that deserve serious consideration, serious enough to require more than one sequel to address them. But whether or not we approve of Elon Musk, Sam Altman, or the AI industry itself, the AI revolution is already underway, driven by forces far larger than any individual actor. Businesses want AI because it lowers costs and increases productivity. Governments want it because they view it as strategically essential. Consumers increasingly rely on it because it saves time and improves convenience. The genie is out of the bottle.

Commentators say the AI boom is unlikely to disappear even if parts of it are overhyped. Investment firms, technology analysts, and economists increasingly describe AI not as a passing fad but as a foundational technological transition comparable to the invention of electricity or to the internet itself. Even skeptical analysts who question short-term productivity claims generally acknowledge that businesses are rapidly reorganizing around AI-assisted production.

The question now is not whether AI should exist but how we can adapt to it without falling into economic collapse or digital feudalism.

AI is Challenging the Fundamentals of the Capitalist Model.

For centuries, industrial economies have depended on a productive cycle based on work for pay. People work for wages, wages create consumer demand, and demand sustains production. But if machines increasingly perform not only factory labor but office and laboratory work — drafting contracts, diagnosing disease, designing products, writing software, driving vehicles, conducting research — then labor income will steadily decline even as productivity rises.

That creates a paradox for the capitalist model: Who buys the products if fewer and fewer people earn wages from producing them?

Historically, technological revolutions created new forms of employment even as they destroyed old ones. The automobile displaced blacksmiths but created mechanics, highway engineers, gas stations, motels, and suburbs. Computers eliminated typists but generated software industries and millions of office jobs. But AI is not confined to one sector. It is predicted to take jobs across the board.

We are not at that stage yet. But China, the world’s largest manufacturing power, is getting close, and Chinese commentators are beginning to grapple with the issue.

China as Forerunner and Test Case.

In a July 2025 opinion piece in the South China Morning Post titled “As AI Replaces Workers, China Could Consider Universal Basic Income,” Tech Editor Zhou Xin writes:

“In the past, Chinese officials have rejected proposals to distribute cash to households, even when many families were clearly in need of support. But while the term universal basic income has yet to appear in any official Chinese policy documents, it may become less foreign in the coming years because of the increasing replacement of entry-level jobs by machines.

Advances in technologies such as artificial intelligence (AI) and automation are expected to render many traditional labour roles obsolete ….

While new technologies will create new job opportunities, these roles are often unsuitable for workers displaced from traditional sectors. The pace at which old jobs are eliminated also outstrips the creation of new ones, which could lead to significant structural unemployment.”

A March 2026 article in ThinkChina raised a related issue. In “When AI Replaces Workers, Who Pays the Taxes?”, Chinese entrepreneur Simon Lin asks if AI systems and robots perform an increasing share of productive work, where will governments obtain tax revenue? Lin’s proposal is to tax the companies that profit from automation. That would help finance the government, but it doesn’t solve the distribution problem. Consumers still need purchasing power. Henry Ford understood this a century ago, when he said he needed to pay his workers enough to buy the cars they produced.

Another article in ThinkChina, titled “Socialism and Universal Basic Income: Creating Happy Societies in the Age of the Knowledge Economy,” addressed this issue in 2020. The article summary states:

“… [T]he knowledge economy offers great potential for bettering the lives of people. But capitalism may not be the best route to take. Power in the hands of a few, income gaps, job losses and wage cuts in the digital age bear this out. Can China offer a third way as it seeks to marry socialism with a market economy? The West is already considering some proposals with a socialist bent such as the Universal Basic Income (UBI). Surely, proponents of socialism can think of even more revolutionary ideas.”

The article continues:

“… China has a substantial low-income demographic. 600 million people live on about 1,000 RMB per month, which is insufficient even for housing rent alone. What we have here is inadequate demand from those with spending power, coupled with a tremendous surplus of production capacity.…”

The author observes that knowledge, once created, can be reused repeatedly at close-to-zero marginal cost, and that the AI-driven “knowledge economy” grows exponentially. That makes it possible for social productivity to grow exponentially as well, eliminating want and greatly enriching material and spiritual life. But capitalism poses some serious constraints on that promising future:

“… [A]s the knowledge economy becomes increasingly “smarter” (AI-driven), the share of wage income in the total distribution of income will continue to decline, while investment returns will be a constantly growing piece of the pie. This means the lion’s share of society’s wealth will be swallowed by capital. In the long run, only jobs with wages lower than the cost of automation have any chance of being kept.… This means that wage levels are bound to be kept low, even to the point of being inadequate for feeding oneself and one’s family.”

he article concludes: “China should kick-start preliminary research on universal basic income (UBI), as soon as possible. … What is UBI, after all, if not an attempt to rise above capitalism?”

Resource Constraints: Energy.

China may need to consider some sort of UBI, but in the United States the biggest practical hurdles to AI abundance may not be political but physical. Where will the U.S. find sufficient resources to produce the goods?

Critics point to the enormous energy consumption of AI data centers, the water demands of cooling systems, the mining requirements for batteries and semiconductors, and the environmental costs of rapid electrification. Some large data centers consume millions of gallons of water daily for cooling. Communities near rapidly expanding facilities have already reported stress on local water systems, and public pushback is growing.

Elon Musk has argued that the water problem is basically an energy problem, noting that once you have enough energy, desalination becomes cheap and simple. His proposed energy solution is solar. At a July 2017 National Association of Governors meeting, he said, “If you wanted to power the entire U.S. with solar panels, it would take a fairly small corner of Nevada or Texas or Utah; you only need about 100 miles by 100 miles of solar panels to power the entire United States. The batteries you need to store the energy, to make sure you have 24/7 power, is 1 mile by 1 mile. One square-mile. That’s it.” Not that all this equipment would need to be in one place, but that shows the projected scale.

The chief constraints to rapid and broad-scale solar development are political and regulatory. The solution being pursued now is solar collection in space, where the sun never sets, massive amounts of energy are available, cooling the equipment is not a problem, and there are no regulatory constraints.

Solar is not, however, the only possible energy solution. Advanced fission and fusion technologies are also in rapid development, largely due to AI-assisted engineering.

Small modular nuclear reactors (SMRs), once largely theoretical, are now moving into commercial development. SMRs are factory-built, standardized systems small enough in some cases to be transported by truck and assembled on site. Supporters argue that modular manufacturing could dramatically reduce both cost and construction time compared to conventional nuclear facilities.

Fusion energy, long mocked as perpetually “thirty years away,” is also advancing. Experimental reactors are already generating plasma temperatures hotter than the core of the sun, while major advances in magnetics are steadily improving stability. The main challenge is that superheated plasma behaves chaotically inside reactors, but AI systems are being used to predict these disruptions and make adjustments before they occur.

That doesn’t mean limitless energy is just around the corner. But the assumption that civilization is approaching an unavoidable energy ceiling may be outdated. In fact AI itself is becoming a key tool in creating the next generation of energy systems needed to support AI-driven productivity.

Physical Resources for Batteries, Electrical Grids and Agriculture.

AI is actually becoming a primary tool for solving resource problems in general. Modern AI-driven systems are dramatically improving electrical grid efficiency, agricultural productivity, recycling systems, and battery management. Precision agriculture reduces fertilizer and water use while significantly increasing yields. AI-managed electrical grids reduce wasted energy. Robotics improve mining precision and materials recovery. Advanced recycling systems increasingly recover rare earth minerals and lithium-ion battery materials that were once discarded as waste.

Thus while AI uses more power, the efficiency it creates in the rest of the physical economy may actually lead to a net reduction in total global resource consumption.

Solving the Water Crisis.

Singapore’s NEWater program is the gold standard for wastewater recycling, turning sewage into ultra-clean, drinkable water. It has now successfully “closed the water loop,” making the island nation resilient against external water shocks.

AI data centers are also now pivoting away from evaporative cooling to water recycling. Modern “closed-loop chilling systems” allow data centers to operate with near-zero direct water consumption once the system is filled. New major projects are marketing themselves as “water-neutral” by using closed-loop cooling technology that recirculates water rather than evaporating it in cooling towers.

Some analysts argue that the location of data centers is wrong. Unused areas are available that have abundant water supplies, existing industrial zoning, and underutilized energy infrastructure. But for communities already under stress from data centers that probably aren’t going anywhere, my own proposal would be to drill for primary (juvenile) water for residential needs. Continuously generated deep in the earth and rising through faults, primary water offers a clean, renewable, locally tappable water source independent of the surface cycle, easily accessible with robotic drilling and abundant energy. The model has been proven primarily in Africa. See my earlier article here.

Wind Power.

Meanwhile, China has successfully launched the world’s first commercial underwater data center powered directly by offshore wind. The Shanghai project was completed for less than half the cost of an equivalent 24-megawatt land-based facility, and by using seawater for cooling, it is about 30% more efficient and cuts electricity consumption by over 22%.

However, underwater data centers were not pioneered by the Chinese. Microsoft’s Project Natick, a 2018–2020 trial off the coast of Scotland, was a technically successful test that demonstrated higher reliability and lower failure rates than land servers. But Microsoft announced it was abandoning the project in mid-2024.

In the U.S., a private company like Microsoft must negotiate with local utilities and typically must pay for its own grid upgrades, which can add years and millions of dollars to a project. In China, state-owned power companies provide special energy pricing and dedicated high-voltage lines for data center clusters. There are also regulatory hurdles in the U.S. and Europe, where complying with environmental regulations is a slow and costly process.

In China, by contrast, the government designates specific areas where environmental reviews and construction permits are fast-tracked specifically for “Green AI” projects. As a result, construction is often 30% to 50% faster than for their Western counterparts. The Chinese underwater data centers are part of a massive state-led industrial policy called the “East-to-West Computing Resource Transfer,” a highly coordinated top-down strategy that treats data centers as a critical national utility integrated directly into the national energy grid. Besides providing direct subsidies and grants, the Chinese government has built offshore wind farms specifically designed to plug into data center units. Placing the AI servers directly at the base of the wind turbines eliminates the energy loss and cost of transmitting power back to the shore.

This is another real-world example demonstrating the need for public investment in infrastructure, ideally through a national infrastructure bank, to fund projects that private markets find too risky or too expensive to build alone.

The Road to Creative Freedom or to Digital Feudalism?

The potential for AI/robotic productivity is promising, but it will not automatically benefit the public. Productivity has already risen dramatically over the past century, while wealth has concentrated at the top.

The future emerging around AI contains two radically different possibilities. One is a highly centralized technocratic system in which wealth and power become highly concentrated, while citizens are managed through digital currencies, surveillance, and algorithmic governance. The other is a civilization in which automation gradually liberates human beings from monotonous labor, shortens work time, expands access to education and creativity, and allows technological abundance to serve broad human flourishing rather than narrow financial interests.

Both futures are technologically possible. Which one emerges will be determined not by the machines themselves but by the political and monetary systems governing them.

Part 3 will examine what is probably the most emotionally charged issue involved in the AI revolution: digital money, central bank digital currencies, surveillance fears, and whether an AI-driven economy inevitably leads to a programmable financial control grid.

Be sure to check Ellen Brown’s earlier posts here on the AI Abundance Paradigm.

Originally published on ScheerPost.com.

Shared via Creative Commons.

Ellen Brown ScheerPost.
MAY 10, 2026

A Universal Basic Income (UBI) has long been proposed as a way to cushion the blow of jobs lost to automation. Under that model, everyone receives a modest monthly payment – enough to cover basic needs and prevent extreme poverty.

But Elon Musk has gone further. On April 16, he posted on X:

“Universal HIGH INCOME via checks issued by the Federal government is the best way to
deal with unemployment caused by AI.

“AI/robotics will produce goods & services far in excess of the increase in the money
supply, so there will not be inflation.”

Rather than a subsistence stipend, Universal High Income (UHI) would be a level of income allowing ordinary people to live well in a world where machines do most of the work. Musk has also said that AI and robotics are the only things that can solve the massive U.S. debt crisis.

That sounds promising, but where will the government get the money to pay the UHI? Critics say any government that tried it would go bankrupt. There are also other concerns, which will be addressed in Part 2 of this article. Here we will look at the financial underpinnings: why UHI is even thinkable, why AI forces a reexamination of how money enters the economy, why the current system cannot scale to meet what is coming, and the implicit transition needed to meet that challenge.

Why the Current Money System Cannot Scale.

The national debt of the U.S. government just topped $39 trillion. China’s is $18.7 trillion. Japan’s is $8.6 trillion. Those of the UK, France, Germany, Italy and Spain are each in the multi-trillion-dollar range. Collective global debt now stands at $353 trillion, 305% of the world’s annual economic output. So even if, hypothetically, everything produced in the world in a year were applied toward liquidating the debt, it still would not be enough to pay it all off.

In fact the debt can never be repaid, because of the way money currently enters the system. Nearly all of the money supply today is created by banks when they make loans. Banks do not lend their existing capital. The loan itself creates the money. The bank adds the loan amount to the asset side of its balance sheet and balances that sum with the same amount on the liability side. When the borrower withdraws or transfers the funds, either the bank takes them from its reserves in “vault cash” or the Federal Reserve debits the bank’s digital reserve account at the central bank. But the lending bank typically has funds coming into its reserve account at about the same rate as they are going out, so its reserves are continually replenished. Thus a very small reserve account can support a much larger money creation engine. For decades before the Fed discontinued the reserve requirement in 2020, it hovered at around 10%.

The chief problem with this debt-based system is the interest, which the bank does not create in its original loan. For a typical long-term loan, interest can double the total tab or more. Where is the money to come from to pay this added liability? Across the system as a whole, it must either come from more borrowing or from existing funds. In the case of governments, that means issuing interest-bearing bonds or tapping taxes and other revenues. The interest on the debt compounds, meaning the government is paying interest on interest. This makes the debt increase exponentially, until it is mathematically unsustainable. Then bankruptcies occur, of banks or even whole governments. Booms turn into busts, and the cycle begins again.

Today, interest on the federal debt is the second largest budget line item after Social Security, exceeding $1 trillion. Meanwhile, workers are losing jobs to AI/robotics, shrinking the income tax base. The system is clearly unsustainable.

How to Raise Demand to Scale to the Upcoming Supply.

A Universal High Income would replenish the shrinking tax base by replacing the lost wages of unemployed workers. But where will the money come from to pay the UHI? The only sustainable solution is for the government to issue it interest-free. That does not mean through the Federal Reserve, which creates money in the same way banks do: it buys federal interest-bearing securities with accounting entries. The Fed collects the interest, which it is supposed to return to the Treasury after deducting its costs. But since 2008, its costs include paying interest on the reserves of its participating  banks, which consumes its profits. (See my earlier article here.)

The only interest-free, debt-free solution that will actually increase the money supply sufficiently to match the projected productivity of AI/robotics is for the money to be issued directly by the Treasury.

This is not a radical new idea. It is authorized in the U.S. Constitution, which provides in Article 1, Sec. 8, that “The Congress shall have Power To … coin Money [and] regulate the Value thereof .…” Abraham Lincoln used government-issued “Greenbacks” to avoid a crippling debt to British-backed bankers. Debt-free government-issued money was also the funding mechanism by which the American colonists succeeded in creating a thriving economy and liberating themselves from the oppressive yoke of the British Empire.

In his 1729 pamphlet “A Modest Enquiry into the Nature and Necessity of a Paper-Currency,” Benjamin Franklin argued that a lack of currency was a tax on industrious farmers and producers, and that a reliable, locally issued paper currency was the “oil” for the gears of trade. The “Nature and Necessity” of this currency was to facilitate the movement of goods between neighbors. Franklin observed that the British strategy of keeping the colonies short of cash was a method of economic suppression. By forcing the colonies to use gold and silver, which were constantly drained back to London to pay for imports, the Crown kept the colonies in a state of permanent debt and low productivity. When the money supply matched the productive capacity of the people, universal prosperity resulted without inflation.

This logic evolved into the “American System of Political Economy” championed by Henry Carey, economic advisor to Abraham Lincoln. He wrote:

“Two systems are before the world… One looks to pauperism, ignorance, depopulation, and barbarism; the other in increasing wealth, comfort, intelligence, combination of action, and civilization. … One is the English system; the other we may be proud to call the American system, for it is the only one ever devised the tendency of which was that of elevating while equalizing the condition of man throughout the world.”

In the context of the 21st century, the “oil” that best lowers the friction of trade is debt-free government-issued money similar to Lincoln’s Greenbacks and colonial scrip. Rather than implementing a radical financial innovation, we would be returning to our roots.

Inflation or Deflation?

The chief objection to the colonies’ paper “scrip” was that they tended to over-print, so that “demand” (money) outstripped supply. Too much money chasing too few goods produced price inflation. But in the 21^st century, we will soon have the opposite problem: too little money chasing too many goods. Machines don’t need food, clothing, shelter, transportation, medical treatment or other services. So who will buy those goods and services?

Money needs to be issued to human consumers, and not just to a few wealthy human consumers serving as debt brokers thriving on interest. To create sufficient demand for the voluminous output of AI/robotics, it needs to go to the whole national population, evenly distributed. Not only can UHI work in that sort of abundant supply without producing price inflation; it is actually essential to prevent deflation.

In a conversation on X, Musk wrote:

“In a normal economy, issuing more money simply increases the dollar price of the existing output of goods & services, meaning people do NOT get more stuff. If AI/robotics massively increase goods & services output, then you actually MUST issue dollars to people or there will be massive disinflation. “

As paraphrased on Yahoo Finance (reposted from Benzinga), Musk wrote that handing out more dollars becomes a problem only when the economy’s supply of goods and services fails to surge alongside the money supply. His claim is that AI and robotics could lift production so sharply that the bigger risk would be falling prices, not rising ones.

But aren’t falling prices a good thing? In this case, no. Prices would be falling due to a lack of demand, meaning producers can’t find customers for their products. They wind up laying off workers and eventually going bankrupt. When spread across the whole economy, the result is a deflationary spiral: prices fall, businesses lose revenue, and the economy contracts, not because production is inadequate but because purchasing power is insufficient. The result is recession or depression. In the Great Depression of the 1930s, food was rotting in the fields while people were starving, because they were out of work and had no money to spend.

Job cuts from AI are already happening. According to the same Benzinga article:

“Evidence of near-term strain is showing up in corporate announcements: employers disclosed more than 27,000 job cuts linked to AI in the first quarter of 2026, according to Challenger, Gray & Christmas. The outplacement firm said that figure was up 40% from the same period a year earlier. “

Robert Reich reports that wages are around two-thirds of the typical corporation’s total cost, and that in the first four months of 2026, big U.S. corporations cut over 128,000 jobs.

How Soon Will All This Happen?

Another Benzinga article, reposted on Yahoo Finance on March 16, detailed Musk’s projected time frame:

Speaking remotely to the Abundance Summit last week, Musk told XPRIZE founder Peter Diamandis that the global economy is on the verge of an explosion so massive it defies historical precedent.

“I’d say the economy is 10 times its current size in 10 years,” Musk said, before quickly clarifying that the growth could be even more explosive. “Greater than,” he added, framing the projected shift in economic output as a “fairly comfortable prediction.” … “Obviously if there’s like World War III or something, that could put a kink in those plans or those expectations,” Musk warned. “But in the absence of World War III, if current trends continue, I would say the economy 10xes in 10 years.” … The catalyst for this vertical climb isn’t traditional manufacturing or trade, but the “hard takeoff” of artificial intelligence. Musk explained that civilization is currently moving through a period of recursive self-improvement, where AI models are increasingly being used to design and build their successors.”

Ray Kurzweil, author of The Singularity Is Near, sees AI reaching Artificial General Intelligence (human-level intelligence across virtually all domains) by 2029, and full transformative abundance by 2045.

Other experts question these time projections, but a radical transformation of traditional manufacturing and trade is likely to happen sometime in the reasonably near future. The question is, will the money system transition soon enough to rescue all the laid-off workers from homelessness and famine?

The Sovereign Wealth Fund Alternative.

There is another model for distributing the gains of automation, one that can be phased in gradually as the AI workforce expands. It comes from Sam Altman, CEO of OpenAI. In an ironic twist, Altman and Musk, who jointly founded OpenAI in 2015, are now locked in a high-profile legal battle over whether Altman diverted Musk’s $44 million investment to transform what was conceived as a nonprofit “for the benefit of humanity” into a highly lucrative for-profit enterprise.

That dispute aside, Altman’s alternative model for sharing AI-generated wealth is a national sovereign wealth fund seeded by the profits of AI and robotics. His proposed American Equity Fund would take public stakes in the companies and technologies driving automation, capture a portion of the resulting productivity gains, and distribute them as universal dividends. The Fund would not replace a Universal High Income but would complement it.

This approach has several advantages. It ties payments directly to real output, scales automatically with productivity, and can be introduced gradually, avoiding the shock of issuing large payments before the supply side has fully expanded. It would resemble the Alaska Permanent Fund, which distributes oil revenues to residents, except that here the resource would be the most powerful general-purpose technology since electricity.

Conclusion: A New Monetary Logic for a New Productive Era.

For centuries, money has been issued as a claim against the future productivity of human labor, repaid from the income that labor generates. The logic of this debt-based system collapses when machines become the primary producers of goods and services. Then the limiting factor becomes purchasing power — the ability of human beings to access the abundance their own technologies create. That requires a monetary architecture that expands with output rather than debt, and distributes income not through wages alone but through mechanisms tied to the productive capacity of the whole system.

Universal High Income and a sovereign wealth fund are two ways of doing that. One ensures a stable floor of demand; the other ensures that the public shares in the gains of automation. Both would be grounded in real production. But for the public to have access to those gains, the money supply needs to expand in proportion to the expanding pool of goods and services. This can be done by restoring the innovation our forefathers baked into the Constitution: debt-free money issued by the government itself.

How to fund a UHI without triggering inflation or driving the government into bankruptcy is the first objection critics raise, but there are others. They argue that people would stop working or stop learning, that society would collapse into idleness or chaos, that life would lose meaning without jobs, that the government would have the power to control how people spend their money.  Will a UHI ring in the promised utopia or lock us into a state-controlled digital prison? Part 2 of this article will address those concerns.

Be sure to check Ellen Brown’s earlier posts here on the AI Abundance Paradigm.

First published on Scheerpost.com

Shared via Creative Commons.

ELLEN BROWN
April 10 2026

“The powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.”

—Prof. Caroll Quigley, Georgetown University, Tragedy and Hope (1966)

In February 2026, the United States and Israel launched surprise airstrikes on Iran. The officially proffered reasons — preventing Iran’s acquisition of a nuclear weapon and forestalling its aggression — have not held up under scrutiny. As James Corbett documented in recent Corbett Report episodes, the nuclear pretext appears to be recycled propaganda, and the scale and timing of the strikes raise deeper questions about motive.

The thesis that “All Wars Are Bankers’ Wars” was popularized by Michael Rivero in a 2013 documentary by that name. His accompanying article begins with a quote from Aristotle (384-322 BCE):

“The most hated sort [of moneymaking], and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural use of it. For money was intended to be used in exchange, but not to increase at interest.”

Rivero then traces how private banking interests have financed and profited from conflicts on both sides for centuries — from the founding of the Bank of England in 1694 to fund William III’s wars to modern regime-change wars.

Full-Spectrum Financial Dominance

Other commentators point to the report of the Project for the New American Century (PNAC) titled “Rebuilding America’s Defenses” (September 2000), which called for “full-spectrum” U.S. military forces to achieve global preeminence. It postulated the need for a “catastrophic and catalyzing event — like a new Pearl Harbor” to accelerate the military transformation the authors envisioned.

This was followed by a 2007 Democracy Now interview in which Gen. Wesley Clark revealed that weeks after 9/11, he had been shown a classified Pentagon memo outlining plans to “take out seven countries in five years”: Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and finishing off with Iran. The first six have since been destabilized or regime-changed. Iran, considered the ultimate prize for Middle East dominance and oil control, remains the last one standing.

Why those seven, and why was Iran the ultimate prize? Greg Palast’s 2013 article titled “Larry Summers and the Secret ‘End-Game’ Memo” supplied the missing financial logic. In 1999, the world was opened to unregulated derivatives trading, so that sovereign bonds, oil flows, shipping routes, and war-risk policies could all be collateralized, rehypothecated (pledged multiple times over), and gambled upon. The lynchpin was the 1997 WTO Financial Services Agreement (the Fifth Protocol to GATS), which became operational in 1999.

None of the seven targeted countries joined the WTO, and they were also not members of the Bank for International Settlements (BIS). That left them outside the long regulatory arm of the central bankers’ central bank in Switzerland. Other countries that were later identified as “rogue states” were also not members of the BIS, including North Korea, Cuba, and Afghanistan.

As for Iran, it is not only the largest and strongest of the Islamic countries but operates the world’s only fully interest-free (riba-free) banking regime. This stands in direct contrast to the conventional Western model, which relies on interest as its primary revenue mechanism. “Money making money out of itself” underpins the global derivatives complex, which is built on rehypothecated, collateralized debt-at-interest.

The last piece in the financial control grid was detailed in David Rogers Webb’s 2024 book The Great Taking. The Everything Bubble, including what some commentators estimate to be more than a quadrillion dollars in derivative bets, is just waiting for a pin. When it bursts, it will trigger large institutional bankruptcies; and under the legal machinery Webb documents, the derivative players will take all.

The 2026 Hormuz insurance crisis triggered by Lloyd’s of London could be that pin. More on all that below.

The City of London and Lloyd’s Weaponize Chaos

For more than three centuries, the City of London – the “Square Mile” that is London’s financial center — has financed both sides of wars and sold insurance against the destruction that would follow. Lloyd’s of London is the insurance pillar of the City’s financial control grid. It is not actually an insurance company but is a corporate body that “operates as a partially-mutualized marketplace within which multiple financial backers, grouped in syndicates, come together to pool and spread risk.”

Lloyd’s has built its reputation on always performing, but it performs at a cost. In 1898, it formalized long-standing practice by introducing the “Free of Capture and Seizure” clause, stripping war risks from standard policies so it could charge extortionate premiums when conflict erupted. It exercised that clause in both world wars and is exercising it in 2026.

After the strikes on Iran, Lloyd’s Joint War Committee expanded its “high-risk” zone in the Middle East. Several of its underwriters issued 72-hour cancellation notices effective March 5, and war-risk premiums for Hormuz transits jumped from 0.25% to 1–5% of hull value. Lloyd’s has stressed that coverage remains available — at the right price. But for a $100 million oil tanker, that means an extra $1–5 million per voyage, a premium the owners are understandably reluctant to pay.

The Private Credit Spark

Meanwhile, other dark clouds are hovering over the market. Financial analyst Stephanie Pomboy warns that the $1.5-3 trillion private credit market is in lockdown, forcing fire sales of liquid assets; and the much larger $5 trillion BBB-rated corporate bond market is teetering. Downgrades will force mass selling, and pensions face a $4 trillion shortfall.

The Hormuz crisis supplies the perfect accelerant to this collateral crisis: higher oil prices create inflation, which raises bond yields (interest), collapsing the value of collateral and triggering margin calls across the derivatives game board. Margin calls then force private credit funds into fire sales.

This is one reason some commentators point to the City of London as the real architect of the Middle East chaos. The old war-insurance machine and the new derivatives machine operate together. One creates the chaos premium; the other harvests it through rehypothecation and legal seizure.

Palast and the End Game Memo: Making the World Safe for Derivatives 

Guaranteeing against shipping loss is one type of insurance, but a much bigger insurance trap is the derivatives market. Sold as a form of insurance against market risk, derivatives are a speculative betting game that extracts rents from all major economic flows.

In his 2013 article, Greg Palast presented evidence of a secret 1997 memo to Deputy Treasury Secretary Larry Summers from Timothy Geithner (then U.S. Ambassador to the WTO acting for Summers) describing the “End-Game” of the WTO Financial Services negotiations. Geithner wrote to Summers, “As we enter the end-game… I believe it would be a good idea for you to touch base with the CEOs ….” The memo then listed the private phone numbers of Goldman Sachs, Merrill Lynch, Bank of America, Citibank, and Chase Manhattan, numbers which Palast confirmed were real.

What was the end-game? Palast wrote:

“US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks.  That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks.  It was like replacing bank vaults with roulette wheels.

Second, the banks wanted the right to play a new high-risk game: “derivatives trading.” … Deputy Treasury Secretary Summers (soon to replace Rubin as Secretary) body-blocked any attempt to control derivatives.

But what was the use of turning U.S. banks into derivatives casinos if money would flee to nations with safer banking laws?

The answer conceived by the Big Bank Five:  eliminate controls on banks in every nation on the planet – in one single move.… The bankers’ and Summers’ game was to use the Financial Services Agreement, an abstruse and benign addendum to the international trade agreements policed by the World Trade Organization.

The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives “products.”

And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.”

The WTO Financial Services Agreement became the battering ram for opening global markets to this derivative play. Every member nation was forced to open its banking system or face sanctions. In 1999, the portion of Glass-Steagall separating investment banking from depository banking in the U.S. was repealed, leaving depositors’ money vulnerable to speculative risk. Derivatives then exploded. Sovereign bonds, oil contracts, shipping insurance policies, and war-risk premiums were all sliced into credit-default swaps, hedges, and other derivative products.

Derivatives trading has since become one of the most concentrated and profitable businesses on the planet, and it is almost entirely controlled by a handful of megabanks. According to data from the Bank for International Settlements and the Office of the Comptroller of the Currency, the top five U.S. banks alone hold roughly 90% of all U.S. bank derivatives, with JPMorgan, Citigroup, Goldman Sachs, Bank of America, and Morgan Stanley dominating the global over-the-counter market. These institutions capture the lion’s share of derivative profits, especially during periods of volatility when the “chaos premium” spikes.

“The Great Taking” — the Legal Trap Granting Derivatives Super-Priority in Bankruptcy 

In The Great Taking, David Rogers Webb lays bare the final piece in this financial control grid: virtually every security today is dematerialized (digitized) and pooled in central depositories. Quiet changes to the Uniform Commercial Code and equivalent E.U. rules have turned ordinary investors into mere “entitlement holders” holding only a legal claim against their brokerages.

As for bank depositors, they have for centuries been categorized as mere “creditors” of their banks. Once the money is deposited, legal title passes to the bank. The depositor holds only a contractual claim (a demand liability) that ranks as an unsecured creditor position in the event of insolvency.

In any insolvency, stocks, bonds, and deposits are legally collateral for the derivatives complex — collateral that has been rehypothecated multiple times over. And when the derivative collateral fails, the rehypothecated house of cards that has been built on it collapses. Margin calls cascade, super-priority is triggered, and the Great Taking begins. (For more on this quite complicated subject, see Webb’s book and my earlier article here.)

Iran’s Interest-Free Islamic Banking: The Structural Obstacle

So what did it matter if Iran and a handful of other countries declined to join in this lucrative bankers’ game? The risk was that when depositors and shareholders realized that they did not actually own their funds, they would move their assets to those safe zones. The holdout countries were also safe from the sort of sanctions imposed by Western governments (and enforced by Western banks and clearing houses) on Russian central bank assets after Russia’s invasion of Ukraine in 2022.

Leading this band of holdouts was Iran, which since its 1983 Law for Usury-Free Banking Operations has run the world’s only fully interest-free (riba-free) banking regime. Its banks use Sharia-compliant contracts — profit-sharing (musharakah), cost-plus financing (murabaha), and leasing (ijara) — instead of charging or paying interest. This banking model stands in direct contrast to the conventional Western model, which relies on interest as its primary revenue stream and underpins the global derivatives complex with collateralized, rehypothecated debt.

Iran’s system was designed to eliminate usury and align finance with real economic activity and risk-sharing rather than speculative debt. It has long been viewed as structurally incompatible with the interest-based, collateral-heavy architecture of City of London and Wall Street finance — an architecture that requires perpetual debt servicing and easily rehypothecated assets to feed the derivatives machine.

By rejecting interest at the national level, Iran has thus insulated itself and its financial partners from the control grid that has made the global “Great Taking” possible.

The Insurance Chaos Has Softened but the “Black Swan” Still Hovers 

The Strait of Hormuz is not fully closed, but traffic remains severely reduced under Iran’s selective, permission-based transit regime. Only vessels from “friendly” or non-hostile nations are being cleared after prior coordination with Iranian authorities. Significant backlogs persist, with more than 1,000 vessels reported waiting or diverted and over 34,000 shipping routes rerouted in the first four weeks of disruption.

President Trump’s $20 billion reinsurance facility announced on March 6 is now operational and has been doubled to $40 billion. Additional major U.S. insurers have joined, while Lloyd’s of London has engaged in related discussions. The facility remains centered on American carriers with U.S. government backing. But analysts doubt it will restart widespread commercial traffic without broader liability protection and safer conditions.

In short, the “insurance chaos” trigger has eased but has not vanished. Premiums remain elevated, uncertainty lingers, and the collateral and derivatives pressures Webb described are still in play.

Conclusions and Resolutions

The 2007-08 Global Financial Crisis (GFC) is now widely regarded as having been triggered by the unchecked explosion of unregulated derivatives — especially credit default swaps and collateralized debt obligations — which turned subprime mortgages into a systemic time bomb. The damage was not confined to the United States: developing countries suffered heavily as well.

Today the risk of a crash is even greater than during the GFC. The global OTC derivatives market has officially ballooned to a notional value of $846 trillion, more than seven times the size of the entire world economy.

Long-range political solutions are possible. Congress could restore Glass-Steagall and impose a financial transaction tax. State governments could withdraw their approval of relevant portions of the UCC and form public banks that can protect against local bank bankruptcies. (See my earlier articles here and here.)

But the immediate need in the current context is to settle the conflict with Iran, and settle it fast, before another black-swan shock ignites the derivatives daisy chain and activates the final Great Taking on a global scale.

Ellen Brown is an American author, attorney, and activist known for her work on financial reform and public banking. She is the founder of the Public Banking Institute and the author of books like Web of Debt and The Public Bank Solution, advocating for publicly owned banking systems.

First published on Scheerpost.com.

Shared via Creative Commons.

By Ellen Brown
JANUARY 28, 2026

A Jan. 17 article on Quartz Markets by Catherine Baab reports that JPMorgan Chase, Goldman Sachs, Wells Fargo, Citigroup and Bank of America returned nearly all of their 2025 profits to shareholders. Goldman Sachs returned $16.78 billion on $17.18 billion in earnings, meaning 97.7% of its earnings went to shareholders. Wells Fargo, Citigroup, JPMorgan, and Bank of America collectively returned tens of billions more. Across the six largest banks, roughly $100 billion flowed to shareholders in a single year.

Banks enjoy a long list of public privileges — federally guaranteed deposits, public charters allowing them to create deposits on their books as loans, access to the Fed’s discount window for emergency credit, and federal bailouts when they get into serious trouble. Even the Federal Reserve’s own profits, which once flowed to the Treasury, now flow to the banks.

They are currently paid 3.65% on their reserves (substantially more than the banks pay on their customers’ deposits), simply for holding them in reserve accounts rather than using them to capitalize new loans. Tens of billions of dollars that were once remitted to the Treasury now land on bank balance sheets with no public benefit attached.

We subsidize the banks’ safety, underwrite their liquidity, and reward them for sitting on assets, without requiring them to invest in communities, build public wealth, or serve any public purpose. It all seems pretty outrageous; but as it turns out, the banks are doing what U.S. corporate law requires them to do. If they don’t follow the “shareholder primacy rule,” they could actually be sued by their shareholders.

The Rule of Shareholder Primacy

The rule comes from a 1919 Michigan Supreme Court case, Dodge v. Ford Motor Co., in which the court required Ford Motor Company to issue an extra shareholder dividend of $19.3 million that year. The court said:

A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of men to attain that end and does not extend to a change in the end itself, to the reduction of profits or to the nondistribution of profits among stockholders in order to devote them to other purposes. [Emphasis added.]”

According to Robert Rhee in a 2023 Stanford Law Review article, the case sat quietly for decades in the law books. He writes, “Dodge was never influential among courts and was ignored by academics until the neoliberal turn of the 1980s”.

The shareholder primacy rule is thus a judge-made doctrine, revived during an era of deregulation and financialization, which is now deeply embedded in corporate law. It is not a constitutional requirement, not a statute passed by Congress and not a democratic choice of the taxpayers. In fact, it directly contradicts the original American understanding of what a corporation was to be.

In the 18th and 19th centuries, corporations were not private profit engines but were public institutions, created by state legislatures to serve explicit public purposes — building bridges, canals, turnpikes, water systems and banks. Their charters limited duration, capped profits, restricted activities and could be revoked if the corporation violated its public obligations. As Rhee notes, early corporations were “public bodies designed to serve public purposes.” The idea that corporations exist solely to maximize shareholder value was an early 20^th century judicial holding brought out of obscurity in the neoliberal era for political ends.

From Dividends to Buybacks: The Casino Model

For most of the 20th century, corporations returned profits to shareholders through dividends. But in 1982, the Securities Exchange Commission changed Rule 10b‑18, effectively legalizing large-scale buybacks of a corporation’s own stock. By reducing the number of shares outstanding, buybacks inflate earnings per share and drive up stock prices. They also enrich executives, whose pay is tied to stock price and who get bonuses in stock shares.

Unlike dividends, which are transparent, predictable, and relatively stable, buybacks follow the dynamics of a casino. The profit is paid, not by the company, but by the next buyer of the stock. That means someone down the line becomes the “greater fool.” And the corporation still has possession of its own stock.

Meanwhile, according to Gallup, nearly 40% of Americans own no stock at all; and of those who do, a much smaller percentage owns bank stock. The Federal Reserve confirms that the top 10% of the population owns more than 90% of all equities. So when banks return their profits as shareholder buybacks, most Americans are not even at the gaming table.

A White House Critique

In her Quartz article, Catherine Baab observes:

[T]he White House has suddenly become very interested in both bank pricing and corporate buybacks. Last weekend, President Donald Trump warned that credit card issuers would be “breaking the law” if they didn’t cap interest rates at 10% for one year.”

Never mind that no such law exists and he lacks the authority to create one. The threat was enough to trigger a Monday sell-off in bank stocks.

Meanwhile, Trump’s housing chief, Bill Pulte, told the Wall Street Journal that homebuilders are “making, in some cases, more money than they’ve ever made, and they’re buying back stock like never before.” Pulte hinted at penalties for companies that don’t help the administration in its purported efforts to push housing costs down. …

But no one in the administration, at least as of this writing, is saying a word about bank buybacks. In fact, the administration pushed to change rules that limited banks’ ability to do that — just months ago.

Baab was referring to a November 2025 move by federal banking regulators to finalize a proposal to ease capital requirements on the nation’s biggest banks. She writes:

After the change, Goldman sent 97.7% of earnings to shareholders. Wells Fargo, Citigroup, JPMorgan, and Bank of America collectively returned tens of billions, too. “

Baab concludes:

Trump’s populism isn’t just hollow. It’s counterproductive, targeting prices in ways that harm affordability while the financial structures that concentrate wealth with those who already have it continue to accelerate.”

Some Counter-arguments

While critics accuse the Administration of indulging corporate interests, Reuters reports that the White House is preparing an executive order to restrict dividends, buybacks, and executive compensation for defense contractors whose projects are over budget or behind schedule. This is a direct challenge to one of the most entrenched, bipartisan power centers in Washington.

Meanwhile, at the local end of the financial spectrum, Treasury Sec. Scott Bessent has been making the case for reviving America’s community banks — the institutions that actually lend to small businesses, farmers, first‑time homebuyers and local governments.

In remarks before the Federal Community Bank Conference on Oct. 9, 2025, Bessent  emphasized the collapse of new bank formation since 2008, the regulatory tilt toward megabanks, the need to restore local lending ecosystems, and a goal of “Parallel Prosperity” — Wall Street and Main Street rising together. He affirmed:

No longer will regulation serve to entrench big banks and empower Washington bureaucrats to the detriment of community banks and the clients they serve.”

This is a pro‑community move, and it opens the door to a deeper solution.

The Public Banking Alternative: When the People Are the Shareholders

If the law requires corporations to serve shareholders, then the simplest way to align banking with public needs is to make the public the shareholder. The best working model in the United States today is the Bank of North Dakota (BND) — a century‑old publicly-owned bank in a conservative state that partners with community banks to support local lending.

The BND finances infrastructure, keeps capital circulating in-state, and returns profits to the public treasury. It does not replace local private banks but strengthens them. And it proves that banks can do productive things with their money if the institutional design rewards it.

If the U.S. wants to redirect capital from buybacks to productive investment, it needs institutions designed for that purpose.

At the national level, H.R.5356, the National Infrastructure Bank Act of 2025,  has been unanimously endorsed by the National Association of Counties among a long list of other endorsers. It mobilizes private capital for public infrastructure, creating long-term, low‑cost financing for projects that generate real economic value; and it is the kind of institution that China and other countries with modern infrastructure already have.

The Deeper Issue: America’s Financial Plumbing Is Misaligned

The real problem is that America’s financial plumbing is not aligned with the needs of the productive economy. We have built a system optimized for shareholder extraction and short‑term returns, which favors megabanks over community banks, the already-rich over struggling families, and private profit over much-needed public infrastructure.

If the problem is in the rules that banks are required to follow, then the solution is either to change the rules or to build institutions that serve the community while operating under the existing banking framework. This can be done with public-community banking partnerships on the model of the Bank of North Dakota and with a national infrastructure bank that serves public infrastructure needs.

At a time when we seriously need to bring the warring factions of our economy together, these banking arrangements can appeal to all political persuasions — to conservatives who value local control, to liberals who value public investment and to independents who are tired of a financial system that seems to serve no one but itself.

Tens of billions of dollars that once went to the public now land on bank balance sheets with no public benefit attached. Banks need to return to their original purpose to serve as public utilities. When the people own the banks, or at least some of them, maximizing shareholder profit means generating profits that flow back into the public arena, available to build schools, bridges, water systems, housing and the modern infrastructure needed to compete on the international stage.

Ellen Brown is a regular contributor to ScheerPost. She is an attorney, founder of the Public Banking Institute, and author of thirteen books including the best‑selling Web of Debt. Her latest book is Banking on the People: Democratizing Money in the Digital Age, and her 400+ blog articles are available at EllenBrown.com.

First published on ScheerPost.com.

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It’s Time to Take Back the Money Power

By Ellen Brown for Scheerpost

Albert Einstein is often quoted as saying that compound interest is “the most powerful force in the universe.” The quote is probably apocryphal, but it reflects a mathematical truth. Interest on earlier interest grows exponentially, outrunning the linear growth of revenue and eventually consuming everything.

That is where the United States now stands. The government does pay the interest on its debt every year, but it is having to pay it with borrowed money. The interest curve is rising exponentially, while the tax base is not.

Interest is now the fastest growing line item in the entire federal budget. The government paid $970 billion in net interest in FY2025, more than the Pentagon budget and rapidly closing in on Social Security. It already exceeds spending on Medicare and national defense and is second only to Social Security. The Congressional Budget Office projects that interest will reach nearly $1.8 trillion by 2035 and will cost taxpayers $13.8 trillion over the next decade. That is roughly what Social Security will pay out over the same decade (about $1.6 trillion a year). The Social Security Trust Fund is running dry, not because there are too many seniors, but because interest payments are consuming the federal budget that should be shoring it up.

Critics accuse the U.S. of “printing dollars” and exporting inflation, but it is not the government that is printing these dollars. Most of the money supply in modern economies consists of deposits created by private banks when they make loans.

Meanwhile, the producing economy is suffocating. The money supply (M2) has not shrunk, but it is largely trapped in reserves, financial assets and corporate balance sheets. Households are short of cash, wages are too low and demand is suppressed. What the real economy needs is liquidity directed to productivity, not locked in speculative pools.

However, every year more of the nation’s income is diverted to bondholders instead of workers, infrastructure or production. This is not “borrowing from the future.” It is tribute — a structural transfer of public wealth to private creditors for the use of our own money — money that is legally backed by the full faith and credit of the American people and could and should be created by our representative government.

Why the Usual Solutions Can’t Stop the Interest Spiral.

As the debt burden grows, policymakers are floating a variety of proposals. But none of them addresses the structural problem: the exponentially growing interest on the debt.

1. Quantitative Easing (QE).

Some analysts argue that the Federal Reserve will soon be forced back into QE, injecting reserves into banks by buying Treasuries. But even if the Fed bought the entire debt tomorrow, taxpayers would still owe the same trillion dollar interest bill. The payments would simply shift from pension funds and foreign central banks to commercial banks.

The Fed is required to remit its profits to the Treasury after deducting its costs. But since 2008, it has paid interest on bank reserves held at the Fed (IORB). That tab now runs at more than $100 billion annually and is consuming the Fed’s profits, which the Fed pays to banks instead of remitting them to the Treasury. (For a fuller explanation, see my earlier article here.) When bonds are transferred to the Fed through QE, the debt service remains; only the postal address changes where the checks are mailed.

2. Stablecoins.

Pegging government liabilities to crypto tokens also does not eliminate interest costs. Stablecoins merely replace lost creditors with new ones. The government still pays the interest — only to a different set of holders.

3. Gold Revaluation.

Fort Knox holds about 147 million ounces of gold. At statutory book value ($42/oz), it is recorded at about $6 billion; at current market prices (around $4,000/oz), it would be worth roughly $589 billion. That’s a dramatic increase, but it covers less than a single year of interest payments. Gold revaluation generates too little to fix the problem.

4. Asset Sales.

Selling federal land or auctioning off slices of the public airwaves to private carriers can generate one-off proceeds but not recurring flows. They too cannot sustainably cover annual interest obligations.

5. Austerity and Tax Hikes.

Austerity shrinks GDP and worsens the debt to GDP ratio, and tax hikes cannot keep up with exponential interest growth.

Restoring the Treasury’s Sovereign Money-Creating Power.

It may be time to reconsider a proposal made in the early 1980s, when the idea of minting some large denomination coins to solve economic problems was suggested by a chairman of the Coinage Subcommittee of the U.S. House of Representatives. He pointed out that the government could pay off its entire debt with some billion-dollar coins. The Constitution gives Congress the power “to coin money [and] regulate the value thereof,” and it places no limit on the value of the coins it creates.

Capitalizing on the seigniorage from minting coins — the difference between their production costs and face value — is now done routinely by the Treasury. When the Mint produces a quarter, the Fed buys it at face value ($.25), even though it costs only about $.12 to make – a 100% profit. This just needs to be done in much larger numbers.

In legislation initiated in 1982, Congress imposed limits on the amounts and denominations of most coins. The one exception was the platinum coin, which a special provision allowed to be minted in any amount for commemorative purposes.

In 2013, with the endless gridlock in Congress over the debt ceiling, the idea was proposed to capitalize on this loophole and mint some trillion-dollar platinum coins. Philip Diehl, former head of the US Mint and co-author of the platinum coin law, confirmed that the coin would be legal tender. He stated, “In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years . . . under power expressly granted to Congress in the Constitution (Article 1, Section 8).”

Modern Monetary Theory [MMT] economists, including Warren Mosler and Prof. Randall Wray, showed that the coin would work operationally: it would be deposited at the Fed, crediting the Treasury’s account without circulating in the consumer economy. Spending would still require Congressional approval, but financing would no longer depend on bond markets.

But the coin was dismissed as a gimmick, and the debt ceiling crisis was resolved by simply raising the ceiling. Today, however, with compound interest threatening to devour the entire budget, that solution won’t work. It’s time to look again at a financial innovation employed by our founding fathers to win the American Revolution and the Civil War — government-issued money.

Remembering Our Roots.

The battle over who has the privilege of creating the money supply — government or banks — has raged for centuries. Today, private banks have won that battle. But it hasn’t always been this way.

Benjamin Franklin was called “the Father of Paper Money.” He argued before the British Parliament that government issued money had allowed the colonies to escape the burden of debt, to thrive and grow. The king, urged by the Bank of England, responded by forbidding all new issues of paper scrip. The colonial economy then sank into a depression, and the colonists rebelled. They won the revolution, but the power to create money for which they had fought was lost to a private banking oligarchy modeled on the one dominated by the Bank of England.

In 1862, President Lincoln boldly took back the money power during the Civil War. To avoid exorbitant interest rates on loans from British backed bankers of 24% to 36%, he had the U.S. Treasury print money directly as U.S. Notes or “Greenbacks,” nearly doubling the money supply. The Greenbacks were key to funding not only the Union’s victory in the war but an array of pivotal infrastructure projects, including a transcontinental railway system, land-grant colleges, and the homestead system. Prices did go up, but it was due to a lack of supply rather than increased demand, as the production of consumer goods was diverted to war.

Unfortunately, Lincoln was assassinated, and the Greenback program was quickly discontinued. Repeated popular attempts to revive it failed. Coins were the backbone of the money supply when the country was founded, but they shrank in significance over the nineteenth century, as bank-created deposits backed by loans grew in importance. By the time modern monetary statistics were available, physical currency had become a minor part of the money supply, and today coins are only a tiny percentage of it.

Enter the Federal Reserve: Who Does the Central Bank Serve?

In an April 2025 essay titled “How Private Banking Replaced Public Money,” economist Michael Hudson wrote, “Money has always been a product of the government, but in the late 19^th century, banking began to be thoroughly privatized and taken out of the hands of any government that controlled it.” The 1913 Federal Reserve Act entrenched this privatization, aligning monetary power with banks rather than democratic government. In a Sept. 2022 interview on The Ralph Nader Radio Hour, Hudson argued:

“It was the Treasury that organized the internal improvements for America – the Erie Canal, the roads, all of the spending into the economy. And the Federal Reserve was created to stop social purpose spending by the government, by essentially cutting the Treasury out of the monetary management process. … The role of central banks is to prevent the government from spending money on social programs and to support the commercial banks in lending money to inflate the asset markets – real estate primarily, also stocks and bonds to support private raids of corporations. And essentially, because their product is debt, to load the corporate sector down with debt. . . .”

This bias is evident not just in the interest on reserves that the Fed pays to banks — profits that should be returned to the Treasury — but in its use of quantitative easing.

In response to the 2008–09 financial crisis, the Fed bailed out profligate megabanks by issuing over $2 trillion in reserves, simply by creating the money on a computer screen. Congress, the White House, and the Treasury all acquiesced. But when it was proposed in 2013 that the government bail itself out of its budget woes by minting two trillion-dollar coins, the Federal Reserve said it would not accept the Treasury’s legal tender; and the White House again acquiesced. Somehow it has become acceptable for the Fed to create money for banks, but not for the Treasury to create money for the people — although the Constitution explicitly empowers it to do so.

Inflation Safeguards.

Trillion-dollar coins can evoke images of million-mark notes filling wheelbarrows. But as Prof. Hudson has observed, “Every hyperinflation in history has been caused by foreign debt service collapsing the exchange rate. The problem almost always has resulted from wartime foreign currency strains, not domestic spending.”

Critics point to the COVID-19 stimulus checks as proof that increasing the circulating money supply causes inflation. But a cross-country study published in 2024 by Olivier Blanchard and Ben Bernanke and another by Brookings economists showed that the 2021–22 spike was driven mainly by supply shocks in food and energy, not excess demand.

Whether minting trillion-dollar coins would inflate consumer prices depends on how the funds are used. Conventional theory says that inflating the money supply inflates prices — “too much money is chasing too few goods.” But the converse is also true: if the new money is invested in domestic manufacturing, construction and infrastructure, it can stabilize prices by expanding productive capacity, increasing supply.

This principle was demonstrated in a 1997 paper by U.K. Prof. Richard Werner titled “Towards a New Monetary Paradigm: A Quantity Theorem of Disaggregated Credit.” Drawing on Japanese data, he showed that credit needs to be split into two separate circulations:

• Productive credit — loans for factories, R&D, and infrastructure — which tracks GDP growth almost one to one without raising consumer prices.

• Financial credit — loans for asset speculation — which fuels bubbles and crashes.

When the government pays $1 trillion a year in interest, that money flows into financial markets, bidding up assets and widening inequality. It does not build factories, housing, or infrastructure. Retiring interest-bearing debt with a non-interest-bearing coin thus removes a major inflation driver.

New money created by the government to retire existing debt would go to bondholders, most of whom are institutional investors, pension funds, or foreign central banks. They are not buying groceries. Their goal is to invest their profits or savings in a secure vehicle that pays some interest. If their bond money were returned to them, they would no doubt just shift the funds to some other low risk investment vehicles, perhaps municipal bonds or money market funds.

Meanwhile, the Treasury’s savings could be redirected into infrastructure, domestic manufacturing, and development, expanding supply in domestic markets, causing supply to rise with demand and keeping prices stable.

China’s Precedent.

Among other precedents, China’s remarkable growth is the closest modern parallel to what U.S. government-issued currency focused on infrastructure and development could achieve. From Jan. 1996 to Sept. 2025, China’s M2 money supply grew by 5,600% (from 5,840.10 CNY Billion to 98,146.60 CNY Billion), while consumer price inflation averaged under 2%. New money was channeled into fixed capital formation — high speed rail (45,000 km built), ports, airports, 5G networks, and housing. The resulting productivity surge absorbed the monetary expansion without price inflation.

Medieval Tally Sticks.

England’s tally stick system illustrated the same logic centuries earlier. Tallies — split hazelwood rods recording debts — functioned as currency for seven centuries. The Exchequer created tallies on demand to pay soldiers, builders, and suppliers. The sticks recorded IOUs that circulated as money and were accepted in payment of taxes. The system ended not because it failed but for political reasons. Ironically, when the surplus sticks were burned in 1834 in the furnace beneath the House of Lords, the fire set the building ablaze and destroyed Parliament itself.

Time to Take Back the Money Power.

There is simply not enough money in the producing economy to fund the services we desperately need, pay down the debt, and keep taxes affordable. Sovereign government-issued money is constitutional, historically proven, and — if invested in infrastructure, manufacturing and development — can actually be deflationary.

The paper money printed by the central bank and the digital money created by private banks are nowhere mentioned in the Constitution. Only Congress is given the money power — the power “to coin money [and] regulate the value thereof” — a power it executes through the Treasury. If the Federal Reserve resists accepting Treasury-minted high-denomination coins, Congress can require their acceptance by amending the Federal Reserve Act, as it has done several times over the years.

With interest threatening to devour the national budget, Congress’s sovereign power to issue money needs to be exercised with some coins larger than quarters and dimes. Congress needs to mint some trillion-dollar coins, as the Constitution empowers it to do.

Originally published on Scheerpost.com.

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NOVEMBER 17, 2025

By Ellen Brown / Original to ScheerPost

“We will build a city-owned bank — not to serve shareholders, but to serve you. A bank that invests in housing, in transit, in climate resilience. A bank that puts our money to work for our people.”
— Zohran Mamdani, Victory Speech, Nov. 4, 2025

New York City has elected a mayor who dares to challenge the status quo. Zohran Mamdani swept into office on a platform of affordability, municipal ownership and economic justice. But Mamdani’s plan to fund his reforms through $9 billion in new taxes on corporations and high earners is already bumping up against political and fiscal realities.

Income taxes are the province of the state, not the city, and NY State Governor Kathy Hochul is standing firm in her resistance to raising them. Pres. Trump has vowed to “cut off the lifeline” to the city, pledging to reduce federal aid to the legal minimum. And Mamdani’s proposals are said to be triggering capital flight. Wall Street is mobilizing. The city’s budget is strained. So where will the money come from?

The Public Bank Alternative

Raising taxes on the wealthy is not Mamdani’s only funding proposal. His vision for economic justice and municipal ownership also includes a public bank. In his June 2025 primary speech, he pledged to create a city-owned bank to fund housing, transit and climate resilience — calling it “a tool to break Wall Street’s grip on our future”.  In his victory speech on Nov. 4, 2025, he again referenced public banking as a pillar of his economic agenda. He described the election as “a mandate for change” and a rejection of politics “that answers only to the few”.

These statements align with his legislative record. Mamdani was a co-sponsor of Assembly Bill A3352, the New York Public Banking Act, and he has consistently advocated for public finance alternatives during his tenure in the State Assembly.

What Is a Public Bank and What Can It Do?

A public bank is a bank owned by the people through their government (local or federal). It can hold public funds, issue loans for public purposes and reinvest profits in the community. This is not a utopian idea; it’s a proven model. The proof is in an unlikely state, conservative North Dakota.

While New York City entrusts its public funds to Wall Street banks — paying billions in interest to private lenders — the state of North Dakota has taken a radically different approach. Its public funds are held in the Bank of North Dakota (BND), a state-owned institution that reinvests profits locally, finances infrastructure, and cushions the blow of economic shocks. While NYC relies on private-profit-driven banks to finance public needs, BND operates as a public utility — prioritizing resilience, affordability and sovereignty.

How North Dakota Escaped the Shutdown

This difference has become particularly evident during the 2025 federal government shut down. While other states suffered SNAP disruptions and budget shortfalls, North Dakota leveraged BND funds without waiting for Washington:

• No state employees were furloughed, despite federal funding interruptions.
• The BND launched the Furloughed Federal Employee Relief Program, issuing nearly $1 million in emergency loans to federal workers, including those at Minot and Grand Forks Air Force bases.
• It rolled out a $1.5 million food assistance package to offset SNAP disruptions.
• It developed a debt refinancing program for farmers, responding to high interest rates, low commodity prices, and inflation.

BND’s 2024 Performance: A Model for NYC

According to its latest annual report, the BND has over $10.8 billion in assets and more than $200 million in net income, much of it reinvested in agriculture, education, and sustainable  development. More than $1 billion was transferred to the state’s general fund and special programs through 2018, most of it in the previous decade. That is a substantial sum for a state with a population that is only about one-tenth that of New York City (780,000 versus 8.3 million). The BND keeps interest payments in-state, funds infrastructure and cushions shocks that would seriously impair other states’ budgets. In October 2024, Truth in Accounting’s annual Financial State of the States report rated North Dakota #1 in fiscal health, with a budget surplus per taxpayer of $55,600.

The average ROE(return on equity) of the BND from 2000 through 2023 was 19.4%. Compare JPMorgan Chase (JPM), by far the largest bank in the country, with 2.4 trillion in deposits. Its average ROE from 2000-23 was 11.38% over the same period. For a detailed breakdown, see here. New York City pays an estimated $4 billion annually in interest to private banks — money that could instead be recycled through a municipal bank to fund housing, transit and clean energy.

How could the BND have outperformed JPM, the nation’s largest bank? The BND has substantially lower costs and risks than private commercial banks. It has no exorbitantly paid executives; pays no bonuses, fees, or commissions; has no private shareholders, branches or ATMs; and has low borrowing costs. It partners with local banks in “participation loans,” avoiding loan origination costs. It engages in old-fashioned conservative banking and does not speculate in derivatives, so it has no losses or risk from derivative trades gone wrong. It makes productive loans that are non-inflationary, avoiding loans that create bubbles and crashes.

An engaging video explaining what a public bank can do is on the website of the Public Bank NYC Coalition, which advocates for a NYC public bank. Another informative series of explanatory videos is on the Public Banking Institute website here.

How to Capitalize the Bank

New York City is well-positioned to capitalize a public bank. According to the Comptroller’s FY2025 report, the city began the year with over $10.4 billion in cash-on-hand, and it maintains an average balance of $10.1 billion. Its annual revenues exceed $100 billion, and its total assets—including real estate, infrastructure and pension funds—are even greater.

The pension funds alone are a vast reservoir of potential capital — managing nearly $295 billion across five systems as of mid-2025. Scott Baker, Economics Editor at OpEdNews and New York State Coordinator for the Public Banking Institute, observes in a November 2025 article that current pension investments are seriously underperforming after fees. Former NYC Comptroller Scott Stringer produced a report showing that for the 10-year pension period ending in 2015, the NYC pension funds generated zero ROI (return on investment) when he included $2.5 billion in management fees.

In 2024, the city contributed $9.6 billion to the funds, while employees contributed about $2.5 billion. Offset by $2.5 billion in management fees, the total contribution for investment was $9.6 billion, the sum coming from the city. Assuming a 10% capital requirement, this $9.6 billion could capitalize $96 billion in loans. $9.6 billion is only one-third of 1% of the total assets of the NYC pension funds, a very modest investment that could generate an average 19% ROI if used to capitalize a public bank on the BND model. In fact, $1 billion would be enough to capitalize a bank the size of the BND.

Banks, Not the Government, Create the Money Supply 

How can a public bank lend billions more than the capital it actually has? The answer is in a little-known secret of banking: banks don’t lend existing money. They create it. When a bank issues a loan, it doesn’t hand out cash from a vault. It creates a deposit in the account of the borrower, backed by the borrower’s promise to repay the loan with interest; and these deposits are counted in the money supply. Roughly 95% of the U.S. money supply is created in this way — by private banks, for private profit.

A public bank does the same thing, but in the public interest. It monetizes future productivity — housing that will generate rent, roads and rail that will transport workers, solar panels that will lower energy costs. To “monetize” means to turn future productivity into something that can be spent now — e.g. spent on the labor and materials necessary to create the products that will repay the loan. The money is created into existence, circulates through the economy and is extinguished upon repayment.

Isn’t That the Sort of “Money Printing” That Drives Up Prices? 

No. Price inflation is a function of supply and demand: prices go up when too much money is chasing too few goods. Injecting new money (demand) does not drive up prices as long as the money creates new supply to absorb it, keeping prices stable.

China’s development model illustrates this principle. Over the past 29 years, its money supply has increased by a whopping 5,500%. Yet price inflation has remained modest, because the increase in money was matched by an increase in goods and services. The China Development Bank — one of the largest banks in the world — along with other Chinese public banks fund infrastructure, housing and manufacturing, creating real assets that absorb the new currency in the marketplace.

Taking on Wall Street 

The New York Public Banking Act (S1754/A3352), which Mamdani co-sponsored in the NY Assembly in 2023, would allow cities in the state to obtain charters for their own public banks. Modeled on California’s AB857, it has broad legislative support. However, it remains stalled in the legislature — likely due to pressure from entrenched financial interests. New York State is home to some of the largest and most powerful banks in the world, and they are in the heart of New York City.

New York City is also the home of the most powerful branch of the Federal Reserve, the New York Fed, and like all Fed branches, it is 100% owned by the banks in its district. Because of its proximity to Wall Street and its operational responsibilities, the New York Fed is often considered the heart of the Federal Reserve System. Its Wall Street owners.are not likely to relinquish control of that megacity’s finances without a fight.

To operate in the banking system, the new city-owned bank will need a Federal Reserve master account. Without it, the bank cannot clear payments or interact with the broader financial system. The bank will also need “reserves,” either as “vault cash” (Federal Reserve notes and coins distributed by the Fed) or as digital reserves originated by the Fed. The bank can get the needed reserves from the city’s deposits held by the bank, but to get a master account is a trickier issue. The Fed is now requiring that new banks be FDIC insured. The BND, which was founded in 1919 and was grandfathered in, does not have or need FDIC insurance. The state is virtually its only depositor, and FDIC insurance would cover only $250,000 of its $7.6 billion in deposits from that single entity. But the current FDIC requirement could be a chokepoint for New York City.

Mamdani also has powerful supporters, however, and he would have the ability to challenge the Fed and the FDIC in court if necessary, following the precedent set by Custodia Bank and others seeking equal access to the payments system. The Custodia bid for a master account failed — likely because it threatened to siphon deposits out of the U.S. dollar system into cryptocurrencies, destabilizing Wall Street’s grip on liquidity. But public banking is not crypto. It is not speculative, extractive, bubble-producing, inflationary or offshore. It is sovereign infrastructure designed to channel capital into the real economy — into goods, services, and livelihoods that nourish communities. Public banking keeps money local and accountable. It’s not a drain on liquidity but a new source of available funds.

Recapturing the Money Power

A recent proposal by the Money on the Left Editorial Collective titled “Democratic Public Finance: A Radical Vision for Mamdani’s New York City” urges the incoming Mamdani administration to consider legal action to challenge federal monetary constraints. While not officially affiliated with the campaign, the authors build on Mamdani’s platform and offer strategic guidance for deepening public finance reform, including by expanding municipal credit capacity through public banking. They propose a long-term campaign to contest what they call “deep legal structures,” including balanced budget amendments and constitutional interpretations that enforce austerity. These challenges, they argue, are essential to unlocking the full crediting capacity of municipal governments. The authors conclude:

Without a doubt, Zohran Mamdani’s vision for New York City represents the most politically savvy and fiscally robust undertaking in decades. This document argues that Mamdani’s transformative vision can be further enhanced if it directly confronts the myth of money scarcity and frames our collective capacities as the source of shared prosperity.

Freed of regulatory blockages, a New York City public bank could hold NYC’s public deposits; finance housing, transit, and energy; reinvest profits locally; and reduce reliance on Wall Street middlemen. In short, it could fund Mamdani’s vision without triggering capital flight.

While businesses are fleeing NYC, North Dakota was rated by Forbes Magazine the best state in the country in which to start a business in 2024. It escaped the 2025 shutdown by reclaiming the power to create money as credit through its own state-owned bank. NYC can fund its future by doing the same.

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