Money. Where is it? Where does it come from? Who is working on ways to get more of it to where cities need it most? When I look back at 2020, I see these are the questions that emerged most often in my reporting.

It wasn’t because money is or should be the center of all things. In this year of every imaginable superlative, I think I gravitated toward these questions even more so than usual because it was my way of most directly confronting what I understood to be the deepest-seated fears and frustrations of life during COVID — other than the health concerns and tragic deaths.

Finding money to pay rent or pay a mortgage, pay medical bills, keep a small business afloat, or prevent massive layoffs of state and local government employees are overwhelming challenges, and there is no one way to resolve them. But as cities start to design and build and implement their collective responses to those challenges, journalists have a duty to arm folks with information that can strengthen those efforts. For me, that manifested in doubling down on stories that demystify how money works.

The unprecedented circumstances of this pandemic and the unprecedented responses it elicited from various levels of government and the private sector revealed a lot about where money comes from and how it circulates around the economy. It provided an occasion to look back at ideas that offer relevant insights for today — ideas that have a lot to do with where money is, where it comes from and getting it to places that are most in need.

The most obvious places to look for money are banks. But the Small Business Administration’s Paycheck Protection Program’s results revealed how the big banks that hold most deposits across the country tend to prioritize larger, wealthier customers by default. Relying on the banking sector as a whole to facilitate the program meant the program fell far short of Congress’ intent, which was to focus on smaller businesses whose customers and communities were hardest hit by the pandemic — those whose owners are less wealthy, serving less wealthy communities, and largely Black, Latino, Asian, indigenous or immigrants.

While it’s widely documented that the banking system in the United States has never provided credit on an equal basis to people of all races and genders, one of the great untold stories of the past few decades has been the shift from a nation of predominantly small, community banks to one where a few large multinational corporate banks now dominate.

From the 1930s to the 1980s, the number of banks in the U.S. remained remarkably stable at around 14,000. But since the late 1980s, the number of banks has steadily fallen to around 5,000 today. Less than 20 of them are Black-owned banks, down from more than 40 before the Great Recession.

That shift was not inevitable, and earlier generations of policymakers explicitly sought to maintain the dominance of small community banks, but the politics and policies shifted starting in the 1980s.

In the midst of all the frustration around the banking system, we reported a story to remind people that elections and politics ultimately shaped the banking system we have today, and that means voters still have the power to reshape it — even if it takes years or decades to unfold.

Public banking gains traction

The first story we published this year for the Bottom Line Newsletter was about reshaping the banking system. It featured New York State Senator James Sanders Jr., chair of the State Senate Committee on Banking, sponsoring a bill that would encourage the chartering of new banks owned by local governments. The bill has since gained local supporters in New York City. California legislators passed a similar bill last year.

We also reported on California legislators introducing a new bill year to establish a state-owned bank as part of a statewide plan for economic recovery from COVID-19. Meanwhile, we reported on local Philadelphia legislators and the city treasurer’s office taking their next steps exploring the establishment of a municipally-owned bank.

Supporters of these efforts envision state- or city-owned banks would primarily hold government deposits and partner with private lenders to finance affordable housing, first-time homeownership, small businesses, renewable energy and other public priorities. Critics worry that government-owned banks would be open to corruption and political favoritism in lending.

The state of North Dakota deposits all its revenues into the state-owned Bank of North Dakota, which is now over a century old. Like any bank, it has made some bad lending decisions in the past, but it has managed to learn how to keep politics out of day-to-day lending decisions — primarily by partnering with local lenders on the vast majority of its loans.

State and local governments currently have $612 billion deposited in bank accounts across the country. Those are public dollars, but with the exception of North Dakota, they are deposited in privately-owned banks, largely the same ones whose lack of connection to communities was revealed in the results of the Paycheck Protection Program.

Banking for good

Banks don’t just hold money. They are also a major source of new money. As explained in a 2014 paper from the Bank of England, the majority of new money actually comes from the process of banks making loans.

“This idea that banks are intermediaries between savers and borrowers, what we’ve been taught, that’s not quite the way it works,” Paul Pryde, a financial industry veteran and now one of the advocates pushing for a state-owned bank in California, told me earlier this year. “I was like ‘oh shit, this was worth knowing, and if that is the case how can we use that power for the public good instead of just reserving the power of that franchise over deposits only for the private sector.”

With that revelation in mind about the money-creating power of banks, we also took a look back this year at banks that were created with an explicit mission for public good, and have taken steps to structure themselves to protect that mission against the temptation to prioritize profits over people. There was Southern Bank, serving the Mississippi Delta; Spring Bank, serving the South Bronx, the nation’s poorest congressional district; and Virginia Community Capital, one of a rare few banks owned and controlled primarily by a nonprofit entity.

An economic crisis can actually be a good moment to start a new bank. Virginia Community Capital launched as a bank in August 2008, at the height of the last financial crisis. “Other banks in the market had to double back on some of their credit,” Virginia Community Capital CEO Jane Henderson told me earlier this year. “We really didn’t have much of a loan portfolio, and $8 million of cash in our bank, so we were able to step into markets that had shut down because of the crisis.”

Where money comes from

But more than any other source of new money, this year has also been a revelation in the power of Congress to create money by passing legislation — like it did when it passed the $2.2 trillion CARES Act in the middle of a pandemic. That included more than $270 billion in the first wave of stimulus checks that went to roughly 160 million recipients — although we also reported on how some of the most vulnerable were left out.

It was sheer coincidence that “The Deficit Myth” came out in March of this year, authored by Stephanie Kelton, Stony Brook University economics professor and former adviser to Senator Bernie Sanders. The book argues the common political trope that the Federal Government should budget like a household budget is a dangerous myth because unlike a household the Federal Government issues the currency it spends.

It happens every year through annual spending bills like the National Defense Authorization Act, which typically sail through Congress without a hint of meaningful opposition nor any language in the bill explaining how Congress should finance its hundreds of billions of dollars it is authorizing to spend on national defense. The bill passes, and money starts flowing almost immediately to the Pentagon, various military branches and defense contractors.

Like the annual National Defense Authorization Act, the CARES Act also didn’t need to include language about how to pay for the things it authorized. “Votes fund spending” has become a social media rallying cry for Kelton and a growing subset of economists, legal experts, policy researchers. They argue that making Congress figure out how to pay for things before authorizing spending seems to be only selectively applied to things like public housing, rental assistance, food stamps, Medicare for All, or reparations for slavery.

Kelton and those on her side are proponents of “Modern Monetary Theory,” and while they do believe there should be limits to federal spending, the amount of federal debt outstanding is simply not one of them.

Demanding to use money-creation power for people who need it most

State and local governments generally don’t issue their own currency, so it does make more sense to compare their budgets to household budgets. When revenues fall, like they have during this pandemic, without federal aid they have to spend down reserves or cut spending.

The CARES Act allocated $150 billion for state and local governments in March. But those dollars had to be earmarked for spending specifically related to COVID-19 response efforts. Without more flexibility or another wave of federal aid, overall state and local government budget shortfalls — forecasted to be as much as $650 billion over the next two years — are already leading to job losses for millions of public sector employees, who happen to be disproportionately Black.

But the reality that Congress can create new money by voting for legislation is already starting to filter out into different circles of local officials, framing discussions and demands in new ways.

As we reported on during this pandemic, local legislators came together earlier this year to demand explicitly that Congress use its money-creating powers to fill in state and local government budget holes. Meanwhile, mayors across the country are launching basic income pilot programs, hoping to build evidence in support of their argument that Congress should use its money-creating powers to fund a Universal Basic Income program.

“These people are printing money, so the idea is the money is there, but the will is not there,” said Newark Mayor Ras Baraka, during a webinar this year about basic income pilot programs. “They’re finding money somewhere, giving it out, and arguing about who gets it. We’re saying this is where it needs to go, and we want them to understand it needs to be in perpetuity, not just a one off thing.”