Solari Report

A Florida State Bank

Preserving Sovereignty, Growing Prosperity

with Dr. Richard A. Werner and Florida Activist Saga Stevin

“You can have 15% growth anywhere and have prosperity…. It’s a perfectly scalable model as long as you make sure you have the core ingredient, which is a decentralized banking system consisting of many, many small banks.”

~ Richard A. Werner
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A Florida State Bank – Preserving Sovereignty, Growing Prosperity with Dr Richard Werner and Florida Activist

 
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Ladies and gentlemen, welcome to the Solari Report. I am very pleased to be joined today by two wonderful people. Economist and brilliant thought leader, Richard Werner, who needs no introduction here. We have a wealth of great information at the Solari Report about him and his work. As we think he’s the top economist in the world on both how you build wealth and how the central banking system and the banking system work. We are also joined by Saga Stevens from Florida, who has been a real leader. She moved back from Min Minneapolis, Minnesota to her home state. Ran for Mayor and Lakeland, and I predict if she runs again, she will win. But she has been a real leader in Florida in helping the Florida legislature and executive leadership really focus on what the state can do to protect financial freedom. And it’s been an inspiration to all of us. So Saga, thank you for joining Richard and me on the Solari report. Oh, well thank you for having me. It’s an honor to be with you too. So we just had the the privilege of publishing Richard’s second sovereign state bank study. This one for Florida. I don’t know if you have it there. Say you wanna hold it up? Yes. It’s beautiful. Yeah. And you can find it on the website and and also we have hard copies if you’re interested, but Richard had done one for Tennessee and then he did this one for Florida. And, and so we have done several soleri reports or legislative briefings on the importance of state banks, and we’ll, we will have those linked up and we will assume you’ve, looked at that content. We don’t wanna repeat it here. What we wanna focus on is the specifics in this new paper, Richard, on Florida. And again, congratulations on doing your second. And the there’s rumors that, you’re working on a third. I hope that’s true.
There is one on Michigan. Indeed. Yeah. The state of Michigan have a, sovereign bank in Michigan? Yes. Okay. Okay. So let’s start on Florida. Talk a little bit about. What was particular here to Florida, particularly the decline in its community banks and the impact on small business. Let’s start off with the what has been happening in the core economy in Florida and, why it is so important to turn it around.
Actually it’s, a sad story because essentially the core strength of the US economy and thriving normally, or in the past thriving states like Florida have been centered on. Of course, as we know, the small firms sector, smallies as enterprises, they’re the main employers. They employ at least around two thirds of everyone. And that’s similar to other places in the world, it’s quite normal. Because often the, narrative and the media focus on the very big companies, even listed companies, but companies that have their shares listed on a stock exchange, that’s 0.1% of all companies usually in that country. It’s almost in most countries the same. And the vast majority of companies, millions of companies, small companies, are these. Small micro but also medium sized companies. They account for most employment and of course they’re not listed on any stock exchange. So for them, the external funding is dominated by bank lending. They have been attempts over the past half century by regulators by the private sector to change that and have alternatives. And of course we do have. Private equity investors. But essentially they usually go for a particular type of company and particularly private equity, which you know, is vibrant in, America. But they tend to focus on helping companies through investment where they can gain majority state one way or another as part of the deal or in some kind of structure and.
The core of us economic prowess over the last 200 years has been essentially family owned businesses, whereby the owners don’t really want to give up control, the majority state, and that, of course makes, equity less attractive and makes debt finance more attractive. But in addition to that, that’s the sort of that’s for those smaller firms that have the option because private equity funds may be interested in it, but the fact is for the vast majority private equity funds are not even interested in, private investors would not turn up to deal with them because actually they’re too small. So now we’ve seen a, we’ve seen a surge of the private equity firms also doing private credit and trying to build private credit. Is private credit filling the gap for the community bank? I’ve seen one of the attempts and often that is done through automated systems credit scoring, as we’ve seen for individual loans to automate things. Because basically the hurdle is that the amounts we are talking. We’re talking about micro businesses. Small family owned businesses are not large enough to be really attractive for equity funds because of the cost. Whatever you look at whatever company, there’s a minimal amount of due diligence you have to do. Then if the volumes we’re discussing at, best are actually so small that it’s not worth their while because of course, the same amount of time and effort you’re putting in attention even of your systems once you’re dedicated to this task. Can, you know if, the company’s bigger, the counterparty’s bigger, achieve a much bigger return? Because then you will earn more in absolute terms, the bigger the company. So there’s always a bias to go, if possible, for the biggest possible type of companies. And so despite all these movements and attempts to to have more alternatives, the fact remains, and that’s undisputed if we look at the smallest companies, micro, small, and then also still the majority of medium sized enterprises. External funding is dominated by bank lending, right? So banks are essentially the one steady source of funds that they can hope to obtain if things go well in their interaction with the banks. Now when you look at the banks, we have the same situation that essentially a bank is always also trying to lend to the biggest. Possible counterparty. Just it’s the mechanics of it. You are spending time and effort on an evaluation you’d like to to also earn something for that. And it makes sense to go for the bigger counterparties. That means that the biggest banks will really only be interested in the biggest companies, the medium sized banks in the. Effectively in the medium sized company ’cause they’re not so interesting for the bigger banks. And then the small firms are really the main area that small banks are focusing on. And their main source of external funding is small banks. And we found empirically doing research on the US that over a long time period, over a 20 year time period, that even as the smallest banks over time, naturally grow. And, by the way, the smallest banks do have the largest share and the biggest propensity to lend to small firms, the smallest firms. So that is quite clear. But as these small banks grow over time, quite naturally
they also actually move on and leave behind the smallest ba companies. And try to look for slightly bigger companies. That movement is always there. It’s all natural. You can’t blame anyone that’s just the physics of it, basically, the proportionality of sizes and, but of course this is implications. The, there’s something we can do about this. It means that overall, the, as the banking system anyway, has a tendency over time to move towards consolidation. If you leave it alone it’s a slow movement. You almost don’t notice. Unfortunately, central planners, central bankers have been keen and quite successfully have accelerated this dramatically through giving various incentives and also regulation and cost structures and interest rate policies to force banks to merge and the smaller ones to merge. And one way or another, that means that there’s been a big shift. Within the banking system towards the larger companies. And that’s, the trouble. And you met, you started out mentioning the fall and the number of small banks. And that is very sad actually. This is, of course, it’s a problem in Florida. It’s a problem in most states, in the us it’s less, a little bit less of a problem in the state of North Dakota because. There is a state bank that has been basically backing the banking sector. We do also see the number of banks declining there. The local banks declining and bank mergers because of course they’re all part of the US economy. There’s the same regulatory pressure coming from Washington. And of course they’re also exposed to that. I think we, there’s a lot we can do to mitigate this pressure because it hurts the small firms. They get less funding and it hurts the middle class because small firms create dependent, independently wealthy decision makers. And of course, that’s also a reason why they’ve become a target over the last half century really. Let me jump in for a second because I was surprised at the die off in community banking in Florida, it was much greater than in Tennessee. And but I, wanted to point out one thing, which is essentially if, the state so, the state controls a great deal of deposits. Of course one of the issues behind this is whether they’re sending their deposits to New York and the financial centers as opposed to keeping them home, rolling them in the bank. The second issue is, and you see the same thing in your charts for, you’ve got a wealth of charts and graphs in this study, but you, if you look at the chart of new banks coming up, so the. The smaller banks try and get bigger clients, and then over time people get frustrated and so they start new banks. But we see the same pattern in Florida as in Tennessee, which is people aren’t starting new banks. And when I talk to the bankers in Tennessee, what they tell me is. It’s so difficult, the regulators, the federal regulators and the FDIC make it so difficult to get new charters that people have just given up. So my question is that I’m assuming it’s the same in Florida, is that true Saga? Yes. It is true in Florida, and I think about, because there’s a lot of Florida has a lot of rural areas and. We’re down now to only, I think, around 80 community banks, small banks, which Florida’s losing over 4% of our community banks a year. The, national average is 2% a year, which is really sad. And as we’re talking, I’m sitting here thinking about. At one point, Publix was a startup and a family owned business. And Publix now has the number one ESOP in the world, and they also have their own credit union. And I think about if people, community people didn’t support them in the beginning. They wouldn’t be here now or they would be owned by a big conglomerate. But as far as the banking goes here, ’cause in Florida you have state chartered and federal chartered, so the state has to charter the banks also. And the state charter, one of the problems that they said is that the people on the board that own the bank, the presidents, all that have to be Florida residents. And for some odd reason, that’s a problem, which I don’t think it should be a problem. ’cause if you own a bank here, you should be a resident here. And then my understanding is if we had the State Bank of Florida, this one, then they wouldn’t have to additionally be under FDIC. They could be under just the state charter, which would help grow the community banks, which of course would help grow the economy overall. Exactly. So Richard, I wanna come back to a point that you, taught me this and I’ve my head’s been exploding about it ever since, which is the more banks you have that are productive and profitable, the more growth you can get without inflation. And inflation is a major concern, but we’re talking about expanding the money supply without triggering inflation. The small business sector, if you could maybe explain what that means to Florida. Yes, exactly. Yeah, basically people need to be reeducated on, these points because over the last half century we’ve been fed false narratives on this really started with, this Club of Rome report limits to growth. But it’s been very systematically spread, whether it’s through the education system, the media the political establishment has been fed the story and repeats the story that somehow grows anyway, goes down this story. A mature economy will have less economic growth as if some kind of law of nature. It absolutely is not a law of nature. What has happened is that since the early seventies, the central planners have worked very hard to actively reduce economic growth, and they did this by shifting bank credit from productive business investment, which generates non inflationary growth, as you mentioned, to another type of credit for asset purchases. To some extent credit for consumption and they cause inflation and not real growth. So if you have credit for asset purchases, property real estate, for instance, but it can be financial instruments, you will then, because bank credit, that’s the key insight bank credit creation is money creation. You are, each time a bank gives a loan, it adds to the money supply and that always does something. Therefore, the question then becomes, what’s the money for? And then you see what the eBay’s gonna be. And if you have more bank credit for real estate purchases as has happened, the range by the regulators since the early seventies, dramatic shifts here, you will get property price booms and also the boom bust cycles. And overall of course also with consumer credit. More inflation and not economic growth. And that’s been the result of this policy decision. At the same time, they’ve consolidated the banking system by giving more and more encouragement for bank mergers and putting banks under pressure in various forms. So they prefer to merge and consolidate, and that’s another factor where you get less economic growth. It’s not as they tell us. Demography or the need for being more environmentally aware and the climate is forcing us to somehow therefore reduce growth and so on. There’s all sorts of narratives there and policy interventions, but of course, perhaps just very briefly on the climate and environmental issue. Because I think we, we all agree that we’d like to protect the environment and protect nature, flourishing nature, and so we can all enjoy nature. It’s important to realize that economic growth is not the enemy of nature and, having flourishing nature without pollution and all that economic growth is not the enemy. That’s what they tell us. They say we have to force growth to zero degrowth negative growth also it’s nonsense. And you can quickly see this in Germany, for the last two years we’ve had negative GDP growth. It’s called a recession. Okay that’s great from this perspective, isn’t it? So that means there’s no more environmental pollution at all in Germany the last two years. Of course not. This is unrelated. Even when you have zero growth, you can still have pollution. So it’s a separate matter. And the main or the fastest proof of this that basically economic growth is not the enemy of the environment, is the fact that we have to separate physical growth from economic growth. And this is in this report, limits to growth. Published here in the early seventies, when was it? 73 or something? Club of Rome. They conflated that on purpose. Now, the fact is, in terms of physics, there isn’t any growth in the first place. So the growth they’re referring to as the bad guy is actually economic growth. But economic growth is a purely. Statistical illusion that we’ve created by defining national income and GDP in, a certain way. And a statistical illusion can’t hurt the environment. And we know from physics, physical growth doesn’t exist. The laws of thermodynamics, you can only transfer energy from one state to another. You can’t create it or destroy it.
So, that’s the conflation. So basically. They’ve given us all sorts of narratives why it’s, to be expected, it’s unavoidable or it’s good that economic growth is going down. While in the meantime, they have actually manipulated the engine of growth, which is the banking system such that it will produce less and less growth. When really. That’s bad for everyone. That delivers more pressure. It delivers less prosperity. It means we’re really underperforming. We could have abundance. So for everyone, it more banks. It means the shrinking tax base relative to what could be that as well, right? Everything. On all counts. There’s less income to go around. The whole national income pie is is not being grown. Let’s look at the opposite. What is possible, and this has been most dramatically illustrated by China, but still remember the debates I had in the early nineties when I was chief economist in Japan and argue argued that the Japanese high growth model can be implemented in any country. You can have 15% growth anywhere and have prosperity. And there were some people there saying but surely you can’t do it. In a country the size of China that’s, it’s so big. That’s like a whole different dimension. The Chinese have demonstrated that you can, and it’s, it was quite obvious that there’s no scale is in fact, it’s a very perfectly scalable model as long as you make sure you have the core ingredient, which is. A decentralized banking system consisting of many, small banks. And perhaps yes, that for China, that was a challenge because they started out with the Soviet system of one bank, a normal bank system that central plan planners love because it’s complete concentration of decision-making power in the Soviet style. Go Bank, the People’s Bank of China. There’s no other bank but the leader at the time, Deng Xiaoping. He already the first switch he wa he made was to say, let’s drop ideology and all the blinkers. Let’s just look at facts and let’s do what works and what we all want is more prosperity. So let’s deliver now what works and let’s check it out. And the first place he went to, and that’s quite radical, was, Hey, let’s go to Japan. They’ve had 15% economic growth for two and a half decades. Figure out how they did it and see whether we can do it. That’s exactly what happened. And Japanese told him. One bank for the whole of China and the whole population of China. How can that ever be efficient and, work? We’ve got hundreds and hundreds of banks, uni, thousands of banks in China. That’s what he did, came back in 78 from his Japan trip and created thousands of banks. And then you have now close to 5,000 banks, almost as many in the us. And there’s all these village banks, local banks, regional banks, savings banks, and each bank has many branches and there’s loan offices in each branch. And they see literally millions of loan applications each year from millions of small firms. And they check them out locally. They, go and kick the tires to see where that makes sense because bank lending is money creation. Very, it’s very important. Also, it’s also due diligence that holds businesses to accountability to perform. Exactly. And that’s why it’s non-inflationary. So there’s three questions that three characteristics in your description of a state bank for Florida that I wanted to go through. And, those three characteristics is the role they can play protecting cash and why that’s so important for financial freedom. The second is. The role they can play as a bullion depository. You, are from Europe and you are used to banks that have gold bullion and deal in gold as well as the local currency, as well as foreign currencies in dollars. But in the United States, that’s relatively uncommon. But something we’d like to see. And then the third thing is. You talk about you, you go through the state budget and you show how economic it is for the state. It’s not just good for the community banks and the general economy, but it’s also good for the state finances. So let’s go through those three. And I also wanna say that because a lot of people have the misconception that if we start the state bank, it’s gonna be a state bank on every corner, and they don’t understand. Basically one branch only. This would be the banker’s bank. So this would enable more community banks to start and those that are here to basically be protected and to grow. So it’s not about the state bank being a whole bunch of banks, it’s them backing community banks so that, we can have a lot more. Exactly very well put. So it’s, really a wholesale bank that banks the banking sector and looks after the whole banking sector, therefore making sure there’s a coincidence of incentives with the interest of the state and the people in the state. And, of course at the same time, that makes it, as Catherine mentioned earlier, also a counterbalanced against. The central planners from Washington who if they’ve done a great job, nobody would complain about. What they’ve done is they’ve killed thousands of banks and they’ve arranged, as I explained earlier for less and less economic growth. So they have not delivered the prosperity that is possible. In the US where we have a lot of ideas, creativity, technology, hardworking people. There should be much more prosperity and, it’s the structure that is currently preventing, it’s designed to prevent. And so this is a, first step to, to address that. So yes, we’ve got these three these three aspects as key arguments why this is quite attractive. So on the first one cash. And then the second one, gold. We could, actually consider them together. ’cause you could add further alternatives if you wanted. Because basically what this means is
you have now flexibility. If you have a stake bank that is looking after the banks, and the banks are looking after the majority of
the, companies in, the state. That’s of course the majority of employment. So it is, that’s why this is so important. It’s the direct connection to really the core of the economy and the core prosperity that and basically turning this potential into real prosperity is possible. And that means you can, adapt to whatever challenges come. And of course, we’ve heard so many concerns this year about what could happen internationally. Nationally debates about bad policies coming from potentially in the future from Washington or international pressures and so on.
And of course it boils down to will people have the freedom to choose as their currency what serves them best and delivers prosperity. And by having a state bank, you can ensure that. You can ensure that there will always be cash. And the local banks, the state chartered banks smaller banks that active only in the state of Florida will be able to always handle cash. Because, and this is not something to be taken for granted. ’cause we’ve seen it in other countries where the central planners and the central banks make sure that the small banks find it very cumbersome, expensive. And something that you want to more or less get rid of and not deal with cash anymore. Sadly, I have to say in Germany now, several small community banks have said we can’t deal with cash anymore. And it’s because of the pressure of the regulators and the cost burden and you know this, it’s quite artificial, it’s unnecessary. So the state bank can make sure. There will always be cash, and we know cash is freedom. It’s a form of of money that does not report back about where it is and who’s using it and so on. It doesn’t impose limits and, control gold likewise
is such a, means, but also of course, in practice, gold hasn’t been used much for transactions, although that’s beginning to pick up a little bit. But again, that’s something you can expand. And also gold can be an anchor can servee as a reserve, as a collateral, as an asset. That also gives banks on on the ground the right incentives not to engage in transactions that would ultimately, they keep doing that, endanger the banking system, but instead it can be an anchor. To remain conservative, for example, if you introduce various convertibility rules and things like that. And of course just being a depository the state bank can be a bull depository. The state can build its gold reserve and ensure that people can, and banks and can deal and settle in gold if they want to. But that can be also for other, instruments, obviously other precious metals, silver. But you can also think of scenarios where suddenly we have an EMP that knocks out entire computer systems across the whole country. And again if you’re then dependent on federal systems it’s gonna take much longer to build something resilient locally. Whereas if you have. A local state bank and already a good network of the local banks is very quick to switch even to analog switch back to taking notes and paper. I would much rather do pony express for Florida than for the whole country. Yeah. Not only that, in Florida we have the hurricanes, so we get electricity knocked out all the time. If I didn’t have money cash last year, our house got flooded. We had to go to the hardware store. They didn’t have electricity. If you didn’t have cash, you couldn’t buy what you needed, the supplies you needed. Exactly. And that’s such a great example. Exactly. And of course that’s just this sort of emergency, which can happen quite frequently, but of course there’s other bigger emergencies. And then again it’s, quite obvious that just from from this perspective of being resilient to crises, the state bank offers so much more potential
to ensure resilience and stability. Even if you had to switch to alternative systems can be done and, then very quickly, ’cause essentially banking is a network industry. Banks and nodes. The state bank is this would be at the core of the banking network and the banks. Each bank essentially is an economic community. And, so you with that you can quickly, if you want, if you had to
for example, introduce a new local currency. Just as an example, or it can be something a different type of commodity can be at the core of the currency. Or you go back to a credit system that’s very tangible, either in writing or the old tally stick system. Everything is possible with this because it gives you this flexibility and because you already have the network, you’re reaching out to everyone, you’re connected to everyone, and then it can be very quickly. Adjusted to whatever the pressures currently may be. And of course we have seen there are important pressures going on internationally, globally. There’s various plans, international plans at work by very globalist oriented people and some are quite influential in the us. So there is proposal being made for essentially what is a much more.
Control oriented alternative vision. And Catherine has put this very eloquently. Digital prison would be shortcut of, referring to this. And of course, central Bank digital currencies are one extreme way to run this, which hopefully we can avoid. But of course, those who want this sort of system now working on plan B, plan C. With stable coins or with other mechanisms to accelerate digitalization and controls. This can also take the form of. Controls on companies and their reporting and digitalization of corporate accounts and optimization, and then forcing companies to only use particular proof software that directly is linked to central reporting government agencies. This is already happening in quite a lot of countries across the globe, so one has to be aware. The control pressure is there from all sides and again. Would the, that’s where you would, the state bank be a block to that? I think so. I think it’s, it creates a pillar of state sovereignty and state authority that can be used to ensure the interests of the people in Florida looked after as primary focus. And based on that, then you have you have the ability. To block certain movements and immediately there’ll be an alternative. ’cause often the situations are created where you have no choice and that’s the problem. But this would give you a lot of flexibility and choices. Richard, I wanted to mention, and I’m trying to understand we have several bills going through the Congress now related to stablecoin and asset tokenization, and it’s very fluid, so it’s hard to understand exactly what will come out of the sausage factory. And I’ve been tracking it regularly, but one of the things you keep hearing with both the crypto bills and the big beautiful bill that’s just passed is something like this, and I’m synthesizing many proposals, but basically what it says is we are now going to shift capital dramatically into new technology, which will give us the 4% growth rate that we need to get out of. Our current sort of debt trap. And I would say it’s not a debt trap, but a robbery trap. But put that aside and we’re gonna grow our way out. Now what’s gonna happen is the old economy’s gonna be thrown overboard and millions of people will be thrown out of work ’cause it’s a controlled demolition, like what we did in Russia. But that’s okay. ’cause entrepreneurs will start new, businesses and things will flourish and we’ll get our 4%. Growth rate. And so what they’re talking about is a huge bifurcation where you suck enormous amounts of capital out of the sort of industrial economy, and you shifted into this fourth industrial economy. It’s very world economic forum kind of vision, and there’s no description of any bridge between people employed here and getting to this new the, notion that somebody’s gonna get fired from. The civil service at the age of 60 and somehow go start a new dynamic company. There’s no bridge for between here to there. And of course we know what happened in Russia when there was no bridge between here and there, and you’re talking about radical movement of money out of banks, insurance company, pension funds over into this new Shangri Law. Anyway, I can’t figure out mechanically how it works because it’s so abstract but, essentially what you’re saying is if you’re a state and you don’t have resilience in the face of this. Yeah. Then it looks pretty bad. Yeah, it looks pretty bad. And what you’re describing is what we have actually seen in developing countries in the last 80 years, which is an extreme inequality where you have those that are insiders enough and get onto the new bandwagon and basically then are in on it and, gain from this, the beneficiaries. While there seems no concern whatsoever for the majority who are left behind and fall by the wayside, which is quite shocking, but that’s and you’d think what globalist Central planner would want to do that? Surely that’s not smart. That is what they’ve been delivering and it’s being quite deliberate because it does serve the purpose it seems of, making a big part of the population that previously was middle class, more or less destitute, always under pressure of yeah, being, being going bankrupt and not being able to pay the bills in fear and therefore, politically. Not really a force. So we’re working now in practice because people are too busy just to survive, right? And then they just, this system of exploitation continues. And it’s, yeah, it looks quite bad. It’s not, there’s no redeeming feature really, of this. And you’d think, why are they doing this? Because you could actually create prosperity of everyone, but that’s clearly not desired. So we’re just about to finish publishing our magazine treatment of Plunder Capitalism, including your interview, and we’ve set out all the different, I think between your interview and the one that Carolyn and I did, we have about 15 to 20 examples of countries where you’ve had this kind of extractive model applied. And I remember the people who used to do it abroad would say, ultimately, we’re gonna come in and do it to the us. And I think your descriptions of how that works historically it’s a good one to compare to what you’re writing about the state bank because the state bank is there to protect against this kind of plunder capitalism in Florida. Exactly. Yeah, that’s a very good point. Exactly right. So what else? Is there anything else about, oh, we, we needed to discuss your discussion of how economic it can be for the state. And also how it can benefit the community banks and credit unions that are already in existence. I don’t think that’s fully grasped. Yes. And you currently pointed out quite accurately that is important to understand this bank will not compete against them.
Quite the opposite. It will be the bank that supports them and it’s only when there’s very large transactions. Where the banks may feel, okay, we need a big partner to help us with this, then it can be asked to help. But otherwise, banking is done by the local banks and the, state bank will essentially engage in state banking activities with the state and otherwise with the banks when desired and needed by them. And so that’s an important point and. Yeah, so just back to Catherine’s question it’s important to realize a bank is almost always profitable. If one understands banking
fairly, reasonably well, what doesn’t have to be a genius? It’s almost impossible to lose money. Now, of course we’ve seen various events and crises happening also in banking, but that’s almost always engineered by central planners. They create these situations. We’ve seen it time and again, I described in my book Princes of the Yen because it’s so shocking, but in great detail. I had all the evidence in terms of people eyewitness accounts, interviews, recorded interviews, and the data. To show it primary, secondary data or so, and it’s been totally undisputed. I could show that the regulators, the central planners on purpose, busted the banking system by creating these crisis. And yes, I just have to say there, there are very few instances where people, economists, or journalists have been able to nail the rigging. I’ve never seen one that nailed it as at such an intricate level as you did. It’s one of, it’s the classic if you don’t believe things are centrally managed, read princess of the end. Exactly right. It makes the point. And then can you also touch on, ’cause you’re talking about profitability, so for the state, approximately the what it would cost to start and then how long would it be before we saw profitability. Yes. It would be profitable fairly quickly, probably within two years. And I mean we, we described in the report estimates and the scenario of, a state capital investment, which is a one-off investment. And after that, and which is actually given the scale of things in the budget is modest, but after that, you will never have to inject money. In fact, you get dividends banking. Is highly profitable. That’s why it’s banking license is quite coveted. It’s a, club because once you have a bank and you run a bank, and that’s why states should definitely get in on that, on this you are part of the club and it’s a club of those who allowed to create money. And that alone already tells you that if you do this correctly and you don’t make big mistakes. If you understand the basics of banking, this will be very profitable for banks. And by the way, perhaps for those who come from investing in stocks and, talking about banking is is new to them. I want to give the example of Warren Buffet. This may surprise some, but and that’s been some good analysis of how Warren Buffet and his, colleagues over those decades have done so well. And I’ve seen this analysis done particularly on the initial decades where there were significant surges in in, in high returns. How is this achieved? Very simple. Instead of say saying, okay, here’s a hundred million that I’m investing. A fund, as most asset managers do, get a mil a hundred million, and you invest a hundred million in stocks and then you know, good luck good, performance. That’s your performance. You realized that it’s much better to use the hundred million to create a bank and use the 100 million as capital in the bank and then invest several billion on the. Asset side and the owners your investors are now the owners of the bank, they get now returns on the say, 2 billion.
And
this is slightly exaggerated, but that’s how he did it. So instead of investing directly, you invest in creating a bank and then you will have a multiple returns. And it’s internal leverage, not external leverage. Excel leverage is risky. That’s why we have hedge fund blow ups. But banks have internal leverage, which is due to the ability to create money. And that’s why you have usually double digit returns on equity. That’s. That’s really what you should have as a bank, double digit returns and equity, and that will apply also to the state bank, but just think about all the, fees and all the money currently going off to, New York and, the big players that a state can already save by making sure. That sort of money stays within the state of Florida in this case. So we’re not gonna talk about it today ’cause we went into it when we discussed the Bank of North Dakota and, the how to, structure a state bank. But one of the things, the success in North Dakota has communicated is it was successful because you had a very. Conservative governance and management, and the state legislature has managed it in a very conservative way. They’ve been very careful, slowly responding to the economy as it needed things. But they have been the danger, of course when you look at this, some legislators say there’s too much temptation to politicize it and play fast and loose. That has to be protected against, which is why how you structure the governance and who you start off with, the governance is so very important. I just did wanna make one other point, Richard, because I think I’ve been stunned and Saga has been also noticed that the legislators and the community’s bankers do not seem to understand that the CBDC or stable coin was social credit system. Is designed literally to replace both the community bankers and the legislators. You’re looking about mon those who control monetary policy, controlling fiscal policy, literally putting the legislature and the community bankers out of business and they don’t see the risk coming. Exactly. That’s what it is. CBDC is. Is the attempt to move even beyond monetary policy and the creation allocation of resources and the control of all that. But take over fiscal policy, the the, transfer of of ownership and wealth between different groups in society, which so far think the prerogative of fiscal policy and therefore the legislature that will also be usurp. Yeah.
It’s so funny because for those of us who’ve, who see the ri understand where these guys wanna go, it’s so clear you wanna turn now before you hit the iceberg. This has been great. Are there any other points before we close, Richard, that you would like to make? And how do we I’m gonna tell everybody how they find your wonderful study but tell us how we follow your work.
You can, see my work on YouTube under Werner Economics, and I’ve got a substack r Werner.substack.com where I produce reports and commentary and so on. And otherwise I’ve got a website. Professor Werner.org is the one with more academic work and peer reviewed journals. Richard werner.org. There’s also more other references and links in there. And then follow me on X scientific Econ is one of my ex accounts. The other one is Professor Werner and also Dr. Richard Werner. So when you came to Tennessee and met with the legislators, it was remarkable because when they heard from you why they should do. A state bank and protect financial freedom. It was just very transformative. Is there any chance you’re gonna be back in Florida before the next legislative session? There is a chance. We’re currently talking about a US trip later in, in August. But yes, the details to be determined. Okay. Thank you so much for this opportunity. It’s been a pleasure. Thank you, Richard. Saga. Any other thoughts before you go? No I am thrilled that you guys did this and I, I plan on getting out to the legislatures because there are some that do get it and do understand, and I feel sometimes, like I’m screaming to the bankers. Not only do I wanna save your business, I wanna grow your business. So thanks to both of you for helping really make it. A lot simpler to understand. Okay. If you’re, in Florida can, people contact you Saga with questions or inquiries or sure. I’ll do the best the best that I know to answer. You all are far smarter than me, but my email I’m on X at Floridian future. Is my ex account, and then my email is saga steven@aol.com. I’m so old school. It’s S-A-G-A-S-T-E-V-I n@aol.com. But they have great spam control. Okay when it comes to educating the leadership in Florida, you’ve done an incredible job. Oh, thank you. I’m very grateful to you. Okay ladies and gentlemen, that’s it. Check out Richard’s study on Florida State banks. And if you live in Florida, this is an effort you wanna support and help. So anyway, so thank you for joining us on the report. Thank you, Richard. Thank you Sge. Everybody. Have a wonderful day. Thanks very much. Have a great day.

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A Florida State Bank: Preserving Sovereignty, Growing Prosperity

 
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Ladies and gentlemen, welcome to the Solari Report. I am very pleased to be joined today by two wonderful people. Economist and brilliant thought leader, Richard Werner, who needs no introduction here. We have a wealth of great information at the Solari Report about him and his work. As we think he’s the top economist in the world on both how you build wealth and how the central banking system and the banking system work. We are also joined by Saga Stevens from Florida, who has been a real leader. She moved back from Min Minneapolis, Minnesota to her home state. Ran for Mayor and Lakeland, and I predict if she runs again, she will win. But she has been a real leader in Florida in helping the Florida legislature and executive leadership really focus on what the state can do to protect financial freedom. And it’s been an inspiration to all of us. So Saga, thank you for joining Richard and me on the Solari report. Oh, well thank you for having me. It’s an honor to be with you too. So we just had the the privilege of publishing Richard’s second sovereign state bank study. This one for Florida. I don’t know if you have it there. Say you wanna hold it up? Yes. It’s beautiful. Yeah. And you can find it on the website and and also we have hard copies if you’re interested, but Richard had done one for Tennessee and then he did this one for Florida. And, and so we have done several soleri reports or legislative briefings on the importance of state banks, and we’ll, we will have those linked up and we will assume you’ve, looked at that content. We don’t wanna repeat it here. What we wanna focus on is the specifics in this new paper, Richard, on Florida. And again, congratulations on doing your second. And the there’s rumors that, you’re working on a third. I hope that’s true.
There is one on Michigan. Indeed. Yeah. The state of Michigan have a, sovereign bank in Michigan? Yes. Okay. Okay. So let’s start on Florida. Talk a little bit about. What was particular here to Florida, particularly the decline in its community banks and the impact on small business. Let’s start off with the what has been happening in the core economy in Florida and, why it is so important to turn it around.
Actually it’s, a sad story because essentially the core strength of the US economy and thriving normally, or in the past thriving states like Florida have been centered on. Of course, as we know, the small firms sector, smallies as enterprises, they’re the main employers. They employ at least around two thirds of everyone. And that’s similar to other places in the world, it’s quite normal. Because often the, narrative and the media focus on the very big companies, even listed companies, but companies that have their shares listed on a stock exchange, that’s 0.1% of all companies usually in that country. It’s almost in most countries the same. And the vast majority of companies, millions of companies, small companies, are these. Small micro but also medium sized companies. They account for most employment and of course they’re not listed on any stock exchange. So for them, the external funding is dominated by bank lending. They have been attempts over the past half century by regulators by the private sector to change that and have alternatives. And of course we do have. Private equity investors. But essentially they usually go for a particular type of company and particularly private equity, which you know, is vibrant in, America. But they tend to focus on helping companies through investment where they can gain majority state one way or another as part of the deal or in some kind of structure and.
The core of us economic prowess over the last 200 years has been essentially family owned businesses, whereby the owners don’t really want to give up control, the majority state, and that, of course makes, equity less attractive and makes debt finance more attractive. But in addition to that, that’s the sort of that’s for those smaller firms that have the option because private equity funds may be interested in it, but the fact is for the vast majority private equity funds are not even interested in, private investors would not turn up to deal with them because actually they’re too small. So now we’ve seen a, we’ve seen a surge of the private equity firms also doing private credit and trying to build private credit. Is private credit filling the gap for the community bank? I’ve seen one of the attempts and often that is done through automated systems credit scoring, as we’ve seen for individual loans to automate things. Because basically the hurdle is that the amounts we are talking. We’re talking about micro businesses. Small family owned businesses are not large enough to be really attractive for equity funds because of the cost. Whatever you look at whatever company, there’s a minimal amount of due diligence you have to do. Then if the volumes we’re discussing at, best are actually so small that it’s not worth their while because of course, the same amount of time and effort you’re putting in attention even of your systems once you’re dedicated to this task. Can, you know if, the company’s bigger, the counterparty’s bigger, achieve a much bigger return? Because then you will earn more in absolute terms, the bigger the company. So there’s always a bias to go, if possible, for the biggest possible type of companies. And so despite all these movements and attempts to to have more alternatives, the fact remains, and that’s undisputed if we look at the smallest companies, micro, small, and then also still the majority of medium sized enterprises. External funding is dominated by bank lending, right? So banks are essentially the one steady source of funds that they can hope to obtain if things go well in their interaction with the banks. Now when you look at the banks, we have the same situation that essentially a bank is always also trying to lend to the biggest. Possible counterparty. Just it’s the mechanics of it. You are spending time and effort on an evaluation you’d like to to also earn something for that. And it makes sense to go for the bigger counterparties. That means that the biggest banks will really only be interested in the biggest companies, the medium sized banks in the. Effectively in the medium sized company ’cause they’re not so interesting for the bigger banks. And then the small firms are really the main area that small banks are focusing on. And their main source of external funding is small banks. And we found empirically doing research on the US that over a long time period, over a 20 year time period, that even as the smallest banks over time, naturally grow. And, by the way, the smallest banks do have the largest share and the biggest propensity to lend to small firms, the smallest firms. So that is quite clear. But as these small banks grow over time, quite naturally
they also actually move on and leave behind the smallest ba companies. And try to look for slightly bigger companies. That movement is always there. It’s all natural. You can’t blame anyone that’s just the physics of it, basically, the proportionality of sizes and, but of course this is implications. The, there’s something we can do about this. It means that overall, the, as the banking system anyway, has a tendency over time to move towards consolidation. If you leave it alone it’s a slow movement. You almost don’t notice. Unfortunately, central planners, central bankers have been keen and quite successfully have accelerated this dramatically through giving various incentives and also regulation and cost structures and interest rate policies to force banks to merge and the smaller ones to merge. And one way or another, that means that there’s been a big shift. Within the banking system towards the larger companies. And that’s, the trouble. And you met, you started out mentioning the fall and the number of small banks. And that is very sad actually. This is, of course, it’s a problem in Florida. It’s a problem in most states, in the us it’s less, a little bit less of a problem in the state of North Dakota because. There is a state bank that has been basically backing the banking sector. We do also see the number of banks declining there. The local banks declining and bank mergers because of course they’re all part of the US economy. There’s the same regulatory pressure coming from Washington. And of course they’re also exposed to that. I think we, there’s a lot we can do to mitigate this pressure because it hurts the small firms. They get less funding and it hurts the middle class because small firms create dependent, independently wealthy decision makers. And of course, that’s also a reason why they’ve become a target over the last half century really. Let me jump in for a second because I was surprised at the die off in community banking in Florida, it was much greater than in Tennessee. And but I, wanted to point out one thing, which is essentially if, the state so, the state controls a great deal of deposits. Of course one of the issues behind this is whether they’re sending their deposits to New York and the financial centers as opposed to keeping them home, rolling them in the bank. The second issue is, and you see the same thing in your charts for, you’ve got a wealth of charts and graphs in this study, but you, if you look at the chart of new banks coming up, so the. The smaller banks try and get bigger clients, and then over time people get frustrated and so they start new banks. But we see the same pattern in Florida as in Tennessee, which is people aren’t starting new banks. And when I talk to the bankers in Tennessee, what they tell me is. It’s so difficult, the regulators, the federal regulators and the FDIC make it so difficult to get new charters that people have just given up. So my question is that I’m assuming it’s the same in Florida, is that true Saga? Yes. It is true in Florida, and I think about, because there’s a lot of Florida has a lot of rural areas and. We’re down now to only, I think, around 80 community banks, small banks, which Florida’s losing over 4% of our community banks a year. The, national average is 2% a year, which is really sad. And as we’re talking, I’m sitting here thinking about. At one point, Publix was a startup and a family owned business. And Publix now has the number one ESOP in the world, and they also have their own credit union. And I think about if people, community people didn’t support them in the beginning. They wouldn’t be here now or they would be owned by a big conglomerate. But as far as the banking goes here, ’cause in Florida you have state chartered and federal chartered, so the state has to charter the banks also. And the state charter, one of the problems that they said is that the people on the board that own the bank, the presidents, all that have to be Florida residents. And for some odd reason, that’s a problem, which I don’t think it should be a problem. ’cause if you own a bank here, you should be a resident here. And then my understanding is if we had the State Bank of Florida, this one, then they wouldn’t have to additionally be under FDIC. They could be under just the state charter, which would help grow the community banks, which of course would help grow the economy overall. Exactly. So Richard, I wanna come back to a point that you, taught me this and I’ve my head’s been exploding about it ever since, which is the more banks you have that are productive and profitable, the more growth you can get without inflation. And inflation is a major concern, but we’re talking about expanding the money supply without triggering inflation. The small business sector, if you could maybe explain what that means to Florida. Yes, exactly. Yeah, basically people need to be reeducated on, these points because over the last half century we’ve been fed false narratives on this really started with, this Club of Rome report limits to growth. But it’s been very systematically spread, whether it’s through the education system, the media the political establishment has been fed the story and repeats the story that somehow grows anyway, goes down this story. A mature economy will have less economic growth as if some kind of law of nature. It absolutely is not a law of nature. What has happened is that since the early seventies, the central planners have worked very hard to actively reduce economic growth, and they did this by shifting bank credit from productive business investment, which generates non inflationary growth, as you mentioned, to another type of credit for asset purchases. To some extent credit for consumption and they cause inflation and not real growth. So if you have credit for asset purchases, property real estate, for instance, but it can be financial instruments, you will then, because bank credit, that’s the key insight bank credit creation is money creation. You are, each time a bank gives a loan, it adds to the money supply and that always does something. Therefore, the question then becomes, what’s the money for? And then you see what the eBay’s gonna be. And if you have more bank credit for real estate purchases as has happened, the range by the regulators since the early seventies, dramatic shifts here, you will get property price booms and also the boom bust cycles. And overall of course also with consumer credit. More inflation and not economic growth. And that’s been the result of this policy decision. At the same time, they’ve consolidated the banking system by giving more and more encouragement for bank mergers and putting banks under pressure in various forms. So they prefer to merge and consolidate, and that’s another factor where you get less economic growth. It’s not as they tell us. Demography or the need for being more environmentally aware and the climate is forcing us to somehow therefore reduce growth and so on. There’s all sorts of narratives there and policy interventions, but of course, perhaps just very briefly on the climate and environmental issue. Because I think we, we all agree that we’d like to protect the environment and protect nature, flourishing nature, and so we can all enjoy nature. It’s important to realize that economic growth is not the enemy of nature and, having flourishing nature without pollution and all that economic growth is not the enemy. That’s what they tell us. They say we have to force growth to zero degrowth negative growth also it’s nonsense. And you can quickly see this in Germany, for the last two years we’ve had negative GDP growth. It’s called a recession. Okay that’s great from this perspective, isn’t it? So that means there’s no more environmental pollution at all in Germany the last two years. Of course not. This is unrelated. Even when you have zero growth, you can still have pollution. So it’s a separate matter. And the main or the fastest proof of this that basically economic growth is not the enemy of the environment, is the fact that we have to separate physical growth from economic growth. And this is in this report, limits to growth. Published here in the early seventies, when was it? 73 or something? Club of Rome. They conflated that on purpose. Now, the fact is, in terms of physics, there isn’t any growth in the first place. So the growth they’re referring to as the bad guy is actually economic growth. But economic growth is a purely. Statistical illusion that we’ve created by defining national income and GDP in, a certain way. And a statistical illusion can’t hurt the environment. And we know from physics, physical growth doesn’t exist. The laws of thermodynamics, you can only transfer energy from one state to another. You can’t create it or destroy it.
So, that’s the conflation. So basically. They’ve given us all sorts of narratives why it’s, to be expected, it’s unavoidable or it’s good that economic growth is going down. While in the meantime, they have actually manipulated the engine of growth, which is the banking system such that it will produce less and less growth. When really. That’s bad for everyone. That delivers more pressure. It delivers less prosperity. It means we’re really underperforming. We could have abundance. So for everyone, it more banks. It means the shrinking tax base relative to what could be that as well, right? Everything. On all counts. There’s less income to go around. The whole national income pie is is not being grown. Let’s look at the opposite. What is possible, and this has been most dramatically illustrated by China, but still remember the debates I had in the early nineties when I was chief economist in Japan and argue argued that the Japanese high growth model can be implemented in any country. You can have 15% growth anywhere and have prosperity. And there were some people there saying but surely you can’t do it. In a country the size of China that’s, it’s so big. That’s like a whole different dimension. The Chinese have demonstrated that you can, and it’s, it was quite obvious that there’s no scale is in fact, it’s a very perfectly scalable model as long as you make sure you have the core ingredient, which is. A decentralized banking system consisting of many, small banks. And perhaps yes, that for China, that was a challenge because they started out with the Soviet system of one bank, a normal bank system that central plan planners love because it’s complete concentration of decision-making power in the Soviet style. Go Bank, the People’s Bank of China. There’s no other bank but the leader at the time, Deng Xiaoping. He already the first switch he wa he made was to say, let’s drop ideology and all the blinkers. Let’s just look at facts and let’s do what works and what we all want is more prosperity. So let’s deliver now what works and let’s check it out. And the first place he went to, and that’s quite radical, was, Hey, let’s go to Japan. They’ve had 15% economic growth for two and a half decades. Figure out how they did it and see whether we can do it. That’s exactly what happened. And Japanese told him. One bank for the whole of China and the whole population of China. How can that ever be efficient and, work? We’ve got hundreds and hundreds of banks, uni, thousands of banks in China. That’s what he did, came back in 78 from his Japan trip and created thousands of banks. And then you have now close to 5,000 banks, almost as many in the us. And there’s all these village banks, local banks, regional banks, savings banks, and each bank has many branches and there’s loan offices in each branch. And they see literally millions of loan applications each year from millions of small firms. And they check them out locally. They, go and kick the tires to see where that makes sense because bank lending is money creation. Very, it’s very important. Also, it’s also due diligence that holds businesses to accountability to perform. Exactly. And that’s why it’s non-inflationary. So there’s three questions that three characteristics in your description of a state bank for Florida that I wanted to go through. And, those three characteristics is the role they can play protecting cash and why that’s so important for financial freedom. The second is. The role they can play as a bullion depository. You, are from Europe and you are used to banks that have gold bullion and deal in gold as well as the local currency, as well as foreign currencies in dollars. But in the United States, that’s relatively uncommon. But something we’d like to see. And then the third thing is. You talk about you, you go through the state budget and you show how economic it is for the state. It’s not just good for the community banks and the general economy, but it’s also good for the state finances. So let’s go through those three. And I also wanna say that because a lot of people have the misconception that if we start the state bank, it’s gonna be a state bank on every corner, and they don’t understand. Basically one branch only. This would be the banker’s bank. So this would enable more community banks to start and those that are here to basically be protected and to grow. So it’s not about the state bank being a whole bunch of banks, it’s them backing community banks so that, we can have a lot more. Exactly very well put. So it’s, really a wholesale bank that banks the banking sector and looks after the whole banking sector, therefore making sure there’s a coincidence of incentives with the interest of the state and the people in the state. And, of course at the same time, that makes it, as Catherine mentioned earlier, also a counterbalanced against. The central planners from Washington who if they’ve done a great job, nobody would complain about. What they’ve done is they’ve killed thousands of banks and they’ve arranged, as I explained earlier for less and less economic growth. So they have not delivered the prosperity that is possible. In the US where we have a lot of ideas, creativity, technology, hardworking people. There should be much more prosperity and, it’s the structure that is currently preventing, it’s designed to prevent. And so this is a, first step to, to address that. So yes, we’ve got these three these three aspects as key arguments why this is quite attractive. So on the first one cash. And then the second one, gold. We could, actually consider them together. ’cause you could add further alternatives if you wanted. Because basically what this means is
you have now flexibility. If you have a stake bank that is looking after the banks, and the banks are looking after the majority of
the, companies in, the state. That’s of course the majority of employment. So it is, that’s why this is so important. It’s the direct connection to really the core of the economy and the core prosperity that and basically turning this potential into real prosperity is possible. And that means you can, adapt to whatever challenges come. And of course, we’ve heard so many concerns this year about what could happen internationally. Nationally debates about bad policies coming from potentially in the future from Washington or international pressures and so on.
And of course it boils down to will people have the freedom to choose as their currency what serves them best and delivers prosperity. And by having a state bank, you can ensure that. You can ensure that there will always be cash. And the local banks, the state chartered banks smaller banks that active only in the state of Florida will be able to always handle cash. Because, and this is not something to be taken for granted. ’cause we’ve seen it in other countries where the central planners and the central banks make sure that the small banks find it very cumbersome, expensive. And something that you want to more or less get rid of and not deal with cash anymore. Sadly, I have to say in Germany now, several small community banks have said we can’t deal with cash anymore. And it’s because of the pressure of the regulators and the cost burden and you know this, it’s quite artificial, it’s unnecessary. So the state bank can make sure. There will always be cash, and we know cash is freedom. It’s a form of of money that does not report back about where it is and who’s using it and so on. It doesn’t impose limits and, control gold likewise
is such a, means, but also of course, in practice, gold hasn’t been used much for transactions, although that’s beginning to pick up a little bit. But again, that’s something you can expand. And also gold can be an anchor can servee as a reserve, as a collateral, as an asset. That also gives banks on on the ground the right incentives not to engage in transactions that would ultimately, they keep doing that, endanger the banking system, but instead it can be an anchor. To remain conservative, for example, if you introduce various convertibility rules and things like that. And of course just being a depository the state bank can be a bull depository. The state can build its gold reserve and ensure that people can, and banks and can deal and settle in gold if they want to. But that can be also for other, instruments, obviously other precious metals, silver. But you can also think of scenarios where suddenly we have an EMP that knocks out entire computer systems across the whole country. And again if you’re then dependent on federal systems it’s gonna take much longer to build something resilient locally. Whereas if you have. A local state bank and already a good network of the local banks is very quick to switch even to analog switch back to taking notes and paper. I would much rather do pony express for Florida than for the whole country. Yeah. Not only that, in Florida we have the hurricanes, so we get electricity knocked out all the time. If I didn’t have money cash last year, our house got flooded. We had to go to the hardware store. They didn’t have electricity. If you didn’t have cash, you couldn’t buy what you needed, the supplies you needed. Exactly. And that’s such a great example. Exactly. And of course that’s just this sort of emergency, which can happen quite frequently, but of course there’s other bigger emergencies. And then again it’s, quite obvious that just from from this perspective of being resilient to crises, the state bank offers so much more potential
to ensure resilience and stability. Even if you had to switch to alternative systems can be done and, then very quickly, ’cause essentially banking is a network industry. Banks and nodes. The state bank is this would be at the core of the banking network and the banks. Each bank essentially is an economic community. And, so you with that you can quickly, if you want, if you had to
for example, introduce a new local currency. Just as an example, or it can be something a different type of commodity can be at the core of the currency. Or you go back to a credit system that’s very tangible, either in writing or the old tally stick system. Everything is possible with this because it gives you this flexibility and because you already have the network, you’re reaching out to everyone, you’re connected to everyone, and then it can be very quickly. Adjusted to whatever the pressures currently may be. And of course we have seen there are important pressures going on internationally, globally. There’s various plans, international plans at work by very globalist oriented people and some are quite influential in the us. So there is proposal being made for essentially what is a much more.
Control oriented alternative vision. And Catherine has put this very eloquently. Digital prison would be shortcut of, referring to this. And of course, central Bank digital currencies are one extreme way to run this, which hopefully we can avoid. But of course, those who want this sort of system now working on plan B, plan C. With stable coins or with other mechanisms to accelerate digitalization and controls. This can also take the form of. Controls on companies and their reporting and digitalization of corporate accounts and optimization, and then forcing companies to only use particular proof software that directly is linked to central reporting government agencies. This is already happening in quite a lot of countries across the globe, so one has to be aware. The control pressure is there from all sides and again. Would the, that’s where you would, the state bank be a block to that? I think so. I think it’s, it creates a pillar of state sovereignty and state authority that can be used to ensure the interests of the people in Florida looked after as primary focus. And based on that, then you have you have the ability. To block certain movements and immediately there’ll be an alternative. ’cause often the situations are created where you have no choice and that’s the problem. But this would give you a lot of flexibility and choices. Richard, I wanted to mention, and I’m trying to understand we have several bills going through the Congress now related to stablecoin and asset tokenization, and it’s very fluid, so it’s hard to understand exactly what will come out of the sausage factory. And I’ve been tracking it regularly, but one of the things you keep hearing with both the crypto bills and the big beautiful bill that’s just passed is something like this, and I’m synthesizing many proposals, but basically what it says is we are now going to shift capital dramatically into new technology, which will give us the 4% growth rate that we need to get out of. Our current sort of debt trap. And I would say it’s not a debt trap, but a robbery trap. But put that aside and we’re gonna grow our way out. Now what’s gonna happen is the old economy’s gonna be thrown overboard and millions of people will be thrown out of work ’cause it’s a controlled demolition, like what we did in Russia. But that’s okay. ’cause entrepreneurs will start new, businesses and things will flourish and we’ll get our 4%. Growth rate. And so what they’re talking about is a huge bifurcation where you suck enormous amounts of capital out of the sort of industrial economy, and you shifted into this fourth industrial economy. It’s very world economic forum kind of vision, and there’s no description of any bridge between people employed here and getting to this new the, notion that somebody’s gonna get fired from. The civil service at the age of 60 and somehow go start a new dynamic company. There’s no bridge for between here to there. And of course we know what happened in Russia when there was no bridge between here and there, and you’re talking about radical movement of money out of banks, insurance company, pension funds over into this new Shangri Law. Anyway, I can’t figure out mechanically how it works because it’s so abstract but, essentially what you’re saying is if you’re a state and you don’t have resilience in the face of this. Yeah. Then it looks pretty bad. Yeah, it looks pretty bad. And what you’re describing is what we have actually seen in developing countries in the last 80 years, which is an extreme inequality where you have those that are insiders enough and get onto the new bandwagon and basically then are in on it and, gain from this, the beneficiaries. While there seems no concern whatsoever for the majority who are left behind and fall by the wayside, which is quite shocking, but that’s and you’d think what globalist Central planner would want to do that? Surely that’s not smart. That is what they’ve been delivering and it’s being quite deliberate because it does serve the purpose it seems of, making a big part of the population that previously was middle class, more or less destitute, always under pressure of yeah, being, being going bankrupt and not being able to pay the bills in fear and therefore, politically. Not really a force. So we’re working now in practice because people are too busy just to survive, right? And then they just, this system of exploitation continues. And it’s, yeah, it looks quite bad. It’s not, there’s no redeeming feature really, of this. And you’d think, why are they doing this? Because you could actually create prosperity of everyone, but that’s clearly not desired. So we’re just about to finish publishing our magazine treatment of Plunder Capitalism, including your interview, and we’ve set out all the different, I think between your interview and the one that Carolyn and I did, we have about 15 to 20 examples of countries where you’ve had this kind of extractive model applied. And I remember the people who used to do it abroad would say, ultimately, we’re gonna come in and do it to the us. And I think your descriptions of how that works historically it’s a good one to compare to what you’re writing about the state bank because the state bank is there to protect against this kind of plunder capitalism in Florida. Exactly. Yeah, that’s a very good point. Exactly right. So what else? Is there anything else about, oh, we, we needed to discuss your discussion of how economic it can be for the state. And also how it can benefit the community banks and credit unions that are already in existence. I don’t think that’s fully grasped. Yes. And you currently pointed out quite accurately that is important to understand this bank will not compete against them.
Quite the opposite. It will be the bank that supports them and it’s only when there’s very large transactions. Where the banks may feel, okay, we need a big partner to help us with this, then it can be asked to help. But otherwise, banking is done by the local banks and the, state bank will essentially engage in state banking activities with the state and otherwise with the banks when desired and needed by them. And so that’s an important point and. Yeah, so just back to Catherine’s question it’s important to realize a bank is almost always profitable. If one understands banking
fairly, reasonably well, what doesn’t have to be a genius? It’s almost impossible to lose money. Now, of course we’ve seen various events and crises happening also in banking, but that’s almost always engineered by central planners. They create these situations. We’ve seen it time and again, I described in my book Princes of the Yen because it’s so shocking, but in great detail. I had all the evidence in terms of people eyewitness accounts, interviews, recorded interviews, and the data. To show it primary, secondary data or so, and it’s been totally undisputed. I could show that the regulators, the central planners on purpose, busted the banking system by creating these crisis. And yes, I just have to say there, there are very few instances where people, economists, or journalists have been able to nail the rigging. I’ve never seen one that nailed it as at such an intricate level as you did. It’s one of, it’s the classic if you don’t believe things are centrally managed, read princess of the end. Exactly right. It makes the point. And then can you also touch on, ’cause you’re talking about profitability, so for the state, approximately the what it would cost to start and then how long would it be before we saw profitability. Yes. It would be profitable fairly quickly, probably within two years. And I mean we, we described in the report estimates and the scenario of, a state capital investment, which is a one-off investment. And after that, and which is actually given the scale of things in the budget is modest, but after that, you will never have to inject money. In fact, you get dividends banking. Is highly profitable. That’s why it’s banking license is quite coveted. It’s a, club because once you have a bank and you run a bank, and that’s why states should definitely get in on that, on this you are part of the club and it’s a club of those who allowed to create money. And that alone already tells you that if you do this correctly and you don’t make big mistakes. If you understand the basics of banking, this will be very profitable for banks. And by the way, perhaps for those who come from investing in stocks and, talking about banking is is new to them. I want to give the example of Warren Buffet. This may surprise some, but and that’s been some good analysis of how Warren Buffet and his, colleagues over those decades have done so well. And I’ve seen this analysis done particularly on the initial decades where there were significant surges in in, in high returns. How is this achieved? Very simple. Instead of say saying, okay, here’s a hundred million that I’m investing. A fund, as most asset managers do, get a mil a hundred million, and you invest a hundred million in stocks and then you know, good luck good, performance. That’s your performance. You realized that it’s much better to use the hundred million to create a bank and use the 100 million as capital in the bank and then invest several billion on the. Asset side and the owners your investors are now the owners of the bank, they get now returns on the say, 2 billion.
And
this is slightly exaggerated, but that’s how he did it. So instead of investing directly, you invest in creating a bank and then you will have a multiple returns. And it’s internal leverage, not external leverage. Excel leverage is risky. That’s why we have hedge fund blow ups. But banks have internal leverage, which is due to the ability to create money. And that’s why you have usually double digit returns on equity. That’s. That’s really what you should have as a bank, double digit returns and equity, and that will apply also to the state bank, but just think about all the, fees and all the money currently going off to, New York and, the big players that a state can already save by making sure. That sort of money stays within the state of Florida in this case. So we’re not gonna talk about it today ’cause we went into it when we discussed the Bank of North Dakota and, the how to, structure a state bank. But one of the things, the success in North Dakota has communicated is it was successful because you had a very. Conservative governance and management, and the state legislature has managed it in a very conservative way. They’ve been very careful, slowly responding to the economy as it needed things. But they have been the danger, of course when you look at this, some legislators say there’s too much temptation to politicize it and play fast and loose. That has to be protected against, which is why how you structure the governance and who you start off with, the governance is so very important. I just did wanna make one other point, Richard, because I think I’ve been stunned and Saga has been also noticed that the legislators and the community’s bankers do not seem to understand that the CBDC or stable coin was social credit system. Is designed literally to replace both the community bankers and the legislators. You’re looking about mon those who control monetary policy, controlling fiscal policy, literally putting the legislature and the community bankers out of business and they don’t see the risk coming. Exactly. That’s what it is. CBDC is. Is the attempt to move even beyond monetary policy and the creation allocation of resources and the control of all that. But take over fiscal policy, the the, transfer of of ownership and wealth between different groups in society, which so far think the prerogative of fiscal policy and therefore the legislature that will also be usurp. Yeah.
It’s so funny because for those of us who’ve, who see the ri understand where these guys wanna go, it’s so clear you wanna turn now before you hit the iceberg. This has been great. Are there any other points before we close, Richard, that you would like to make? And how do we I’m gonna tell everybody how they find your wonderful study but tell us how we follow your work.
You can, see my work on YouTube under Werner Economics, and I’ve got a substack r Werner.substack.com where I produce reports and commentary and so on. And otherwise I’ve got a website. Professor Werner.org is the one with more academic work and peer reviewed journals. Richard werner.org. There’s also more other references and links in there. And then follow me on X scientific Econ is one of my ex accounts. The other one is Professor Werner and also Dr. Richard Werner. So when you came to Tennessee and met with the legislators, it was remarkable because when they heard from you why they should do. A state bank and protect financial freedom. It was just very transformative. Is there any chance you’re gonna be back in Florida before the next legislative session? There is a chance. We’re currently talking about a US trip later in, in August. But yes, the details to be determined. Okay. Thank you so much for this opportunity. It’s been a pleasure. Thank you, Richard. Saga. Any other thoughts before you go? No I am thrilled that you guys did this and I, I plan on getting out to the legislatures because there are some that do get it and do understand, and I feel sometimes, like I’m screaming to the bankers. Not only do I wanna save your business, I wanna grow your business. So thanks to both of you for helping really make it. A lot simpler to understand. Okay. If you’re, in Florida can, people contact you Saga with questions or inquiries or sure. I’ll do the best the best that I know to answer. You all are far smarter than me, but my email I’m on X at Floridian future. Is my ex account, and then my email is saga steven@aol.com. I’m so old school. It’s S-A-G-A-S-T-E-V-I n@aol.com. But they have great spam control. Okay when it comes to educating the leadership in Florida, you’ve done an incredible job. Oh, thank you. I’m very grateful to you. Okay ladies and gentlemen, that’s it. Check out Richard’s study on Florida State banks. And if you live in Florida, this is an effort you wanna support and help. So anyway, so thank you for joining us on the report. Thank you, Richard. Thank you Sge. Everybody. Have a wonderful day. Thanks very much. Have a great day.

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A Florida State Bank

July 28, 2025

By Catherine Austin Fitts

In “What the States Can Do: Building the Legal and Financial Infrastructure for Financial Freedom”—the lead component of our 2024 publication, Using the U.S. States’ Constitutional Powers to Preserve Sovereignty and Financial Freedom—we listed the creation of a sovereign state bank (or a comparable mechanism to ensure independent in-state banking) as a pivotal step that U.S. states can take to preserve financial freedom and state sovereignty. North Dakota, currently the only state to have such a bank, offers an excellent model.

Economist and banking expert Richard A. Werner has explained the strategic importance of a sovereign state bank in multiple interviews and documents published at the Solari Report, including 2023’s Why a Sovereign State Bank Is Good for Tennessee and, earlier this year, The Case for a State Bank of Florida (SBFL): Business and Economic Case. A state bank can help counter threats to state-level and individual sovereignty and economic prosperity and halt the unfortunate trend of banking system concentration and exertion of federal control through strings-attached grants and other payoffs. Even more importantly, a sovereign state bank can support (while not competing with) the community banks and credit unions that are so essential for small- and medium-sized enterprises—which, in turn, are the lifeblood of thriving local economies.

In this Special Solari Report, Prof. Werner and activist Saga Stevin explain how the creation of a state bank can preserve sovereignty and grow prosperity in Florida. Stevin is a former mayoral candidate in her hometown of Lakeland and started the non-profit Floridian Future in 2023 with the goal of “buttoning up Florida financially” with a sovereign state bank.

Florida’s last CFO, Jimmy Patronis, signaled support for a state-owned bank a year ago, and it is to be hoped that incoming CFO Blaise Ingoglia, sworn into office on July 21, will keep the ball rolling.

Note: Tucker Carlson has just conducted an in-depth interview with Richard Werner on the Fed and banking that is well worth watching!

Links

Richard Werner Exposes the Evils of the Fed & the Link Between Banking, War, and the CIA

CFO Patronis Proposes “Sunshine Freedom Bank,” a First-of-Its-Kind State Bank of Florida

Florida’s Conservative CFO Proposes State-Owned Public Bank

Related at Solari

The Case for a State Bank of Florida (SBFL): Business and Economic Case

Why a Sovereign State Bank Is Good for Tennessee

Monthly Briefings for State Leaders: Sovereign State Banks with Prof. Richard A. Werner

Special Solari Report: A Sovereign State Bank and Bullion Depository for Tennessee with Senator Frank Niceley

What the States can Do: Building the Legal and Financial Infrastructure for Financial Freedom

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