From Times Online: July 11 2009

Sir,

Vince Cable is absolutely right to remind us that we, as taxpayers, are the masters of the banks we have bailed out from the brink of insolvency (We’re the masters of the banking universe, July 8). And we agree that the new financial architecture cannot just be a modified form of the old high-risk structures that led to the near-collapse of the entire sector.

But the critical debate needed is not just how the government runs publicly-owned banks, but to what end.

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15th July, 2009.  On a day when record unemployment numbers - especially youth unemployment – are announced, it is a relief to hear more voices in support of government action to compensate for private economic failure. As the Duke of URL notes below, Galbraith also understood how to deal with economic failure. Today in the Guardian, the blessed Danny Blanchflower makes a powerful case for a fiscal stimulus.

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14 July, 2009

Julian Glover has an interesting piece in the Guardian today. It seems voters want the Tory spending axe to fall on their necks – after the next election. This fatalistic majority in favour of economic self-harm should come as no surprise. Led by David Cameron and the Tory Party, who

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30 June, 2009. This column and its readers have been sadly neglected to meet the demands of other peoples’ agendas. I can only apologise.

For it is other peoples’ agendas that preoccupies me today. There have been many important meetings held this year, in which groups of people have come together to collectively develop ‘grand narratives.’ on the theme of the financial crisis.  These, it is hoped, will help galvanise an apparently mesmerised population into action against those in finance, politics and the world of academic economics – that have helped wreak ruin, bankruptcies, home repossessions, large-scale fraud and unemployment on society.

But most of these grand narratives are characterised by ignorance of the nature of bank money, and credit, and as a result both mis-diagnose the causes of the crisis, and mis-analyse solutions….

This is because most assume that credit = savings, and that only by mobilising savings or surpluses (generated by production of one sort or another) is it possible for banks or financial institutions to lend money to finance economic activity.  In other words, that money (deposits/savings/credit) exists only as the result of economic activity; and those deposits/savings/credit then create economic activity.

On the contrary: it is bank money/credit that creates economic activity – and only then are deposits, surpluses and savings generated.  And not the other way around.

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