Tagged with Credit

Why banks power to create money should be regulated and directed (but not ended)

Banking trade screensAnn is author of “Just Money: how society can break the despotic power of finance”, published by Commonwealth, 2014. 

The Financial Times is hosting a major debate on whether the private banking system should be allowed to continue creating 97% of the credit or money circulating within the economy. Martin Wolf, its respected economics commentator, supports the ‘Chicago Plan’ that effectively calls for private banks to lend out only as much as they have in “reserves”: “Banks could only loan money actually invested by customers.” Private banks would be prevented from creating money, and instead all money would be issued by the state. The quantity issued would be decided by an independent committee as argued by amongst others, the IMF’s Kumhof and Benes and Positive Money. Continue reading →

A budget that ignores reality: ideological and macro-economically hollow

Since 2009 the economy has struggled to recover from the mire of a slump caused by the banking sector. But each time economic activity quickens, it hits a series of buffers. These buffers are well known , but denied by the Chancellor: a vast overhang of private debt now slowly being de-leveraged; a banking sector whose financial transmission system is broken; falling real incomes, rising unemployment, high energy costs and a collapse in investment. Continue reading →