Dan Roberts has a great column in the Guardian today. He asks the right questions. First, why is the Treasury spending £8 billion of taxpayers money reinflating the housing market? Second, why is the Treasury encouraging this now nationalised bank to increase mortgage lending, when the productive sector of the economy – companies, small businesses et al – are being starved of loans from taxpayer-bailed-out-banks, or else having to borrow at usurious rates?
A superb report from the Centre for Research on Socio Cultural Change at Manchester (“An alternative report on UK banking reform”) suggests the answer: The nationalisation of Northern Rock is being treated as an “equity style turn around”, with the overarching objective of protecting and creating value for the taxpayer as shareholder.
“It is not clear whether the banks have been nationalised or the Treasury has been privatised as a new kind of investment fund.”
It makes perfect sense doesn’t it, given that the Treasury is advised on these matters (some would say it has been captured) almost exclusively by bankers? Get reading the CRESC report -its excellent – the first piece of independent, academic thinking on reform of the banking sector to have crossed my path.
2 thoughts on “The Treasury Privatised”
“It is not clear whether the banks have been nationalised or the Treasury has been
privatised as a new kind of investment fund.”
with our GoldmanSachsTreasuryFed… its clear here!
Why inflate the housing market? Because 60% of the UK’s money supply depends upon mortgage loans and any contraction in mortgages
shrinks the money supply. But this is a supremely daft way to run an economy. The Government should take full control of the money supply and issue
money. That is what it is there for. It already issues notes and coins which once made up half the money supply, so there is no reason why it
cannot issue electronic money directly into the economy, for example, by financing some of its own spending in this way.
The CRESC report
although very good in many ways misses this point and does not acknowledge private debt as the fundamental problem.
‘Faced by a failure of
credit, they only propose the lending of more money’ (FDR 1933)