They’re Both Aren’t They?

Just been to an amazing bank meeting in Edinburgh (organised by Friends of the planet earth). Adam Posen (Bank or investment company of England Monetary Policy Committee). Steve Keen (Economics prof University of Western Sydney). Ben Dyson (Positive Money). Richard Werner (International Banking prof Southampton University). Ann Pettifor (Director of Policy Research in Macroeconomics).

Huw Davis (Head of Personal Banking at Triodos bank or investment company). Chris Cook (Senior Research fellow, University College London). Tony Greenham (New Economics Foundation). Highlights of their speeches (for me) are set out below – but this won’t be considered a fair overview of their speeches. First a couple of general points. Several speakers were very critical of the fact that private banks are absolve to create money and of the utilization banks have manufactured from this freedom.

But none of them (considerably as I remember) actually said, “let’s ban private money creation” – though they got very near. Second, several of the loudspeakers seemed to have no idea of the likely bureaucratic costs of the changes they suggested to the prevailing banking system. We were holding the audio speakers concerned with environmental and ecological issues especially. In a day or two I’ll enlarge on that in a post. Anyway, the interesting bits for me thus were. Comments by me are in brackets.

  • Diversify your cost savings with CDs
  • Get OTP. At this time you need to pay 1% of purchase price
  • It as an alternative for very short-term bank or investment company deposits of 90 or 120 times
  • Incremental income when taking part in a jobs training program
  • Change in Net Export Spending
  • Do you have a commercial loan or a business loan department

He accepted his current job at the Bank of England partially because of the intensity of debate in Britain as to what regarding the bank operating system. No central banking institutions have successfully pricked bubbles. All of the worst bubbles were caused by house / property price increases. A possible way of deflating property bubbles may be to use existing property taxes – i.e. hike those fees when bubble enlarges.

Britain is good at international bank and has been for a long period. But it is bad at local banking for smaller businesses. Britain needs the VARIETY of types of financing for smaller businesses that the U.S. We have to question the basic proven fact that a country benefits much from having an internationally competitive banking industry. Bank subsidiaries far away should be capitalised from sources in the latter countries.

Schumpter said in 1934 that private banking institutions create money out of nothing. Krugman does not realise that private banking institutions create money. Solow debunked neo-classical economics. There is an undesirable feed-back mechanism in the private bank or investment company money creation process. Private bad debts are much bigger than federal government debts. Keen favours what he phone calls “jubilee stocks”.