Ann Pettifor

Money…still a mystery – to economists!

Returns on banking shares - Bank of England

I was in St. Albans last night, speaking to a gathering of wonderful people, organised around a largely Christian community – Just Community –  who had all come out on a freezing January night to listen to four people discuss, money, credit, debt finance and economics.  Was proud to be on the platform with an old friend Stephen Rand of the Jubilee Debt Campaign; with John Christensen of the Tax Justice Network , and a powerful campaigner against the fraudulent and corrupting power of tax havens…and who by the way, advised and now works closely with Nicholas Shaxson, author of “Treasure Islands” . Finally John Featherby, a City of London lawyer, and author of ‘The White Swan Formula‘ spoke in defence of his colleagues in the City.

Thank you to the keen and generous audience for your sustained attention….I talked a lot about money, and am not sure that my exposition was entirely clear….so thought that I would remind readers of a piece I wrote earlier, which is currently posted on the Advocacy International website…and which outlines things a little more clearly. It’s called ‘Women talking macroeconomics’, and I hope will be helpful to those who came away from last night’s meeting more puzzled than enlightened….

Readers might also be interested in this light-hearted piece from the Real World Economics Blog…on Why Money? …It’s a well-deserved attack on the micro-economics profession, who exclude money from their analyses…or regard money as ‘neutral’..Micro-economists are dominant, both in university departments, but more particularly in banks and other financial institutions….Which goes to explain why so many of these institutions had so little understanding of money/credit, and in particular of bank money, and of what they were doing with it….And why they turned a blind eye to the gigantic credit bubble from which banks profited so immensely during the 90’s and 00’s….


5 thoughts on “Money…still a mystery – to economists!”

  1. Just read the “women in macroeconomics piece” – a brilliant exposition, so straightforward and simple an explanation of what went wrong, genius.

    It just leaves me scratching my head as to why this simple explanation and narrative isn’t more widely known (by us non City-boy boys, as well as by the girls).

  2. PS You’ve thrown in a chart of “returns on banking shares”, not cross-referenced in the text, with a literally mindboggling y-axis.

    Have you written or blogged on that chart before or elsewhere? If not, could you be persuaded to do so?

    Again, why on earth is such a stunning graph not more widely known?!

  3. Strategist….thanks for this. No, but the chart comes from the Bank of England, and a speech by Andy Haldane of the Bank made in July, 2009 (although mysteriously I can no longer find it on the Bank’s site…) The speech (and chart) is quoted in a lot of blogs and other media, including the Guardian here:

    And this is a link to a speech by Haldane which is also useful: Hope that’s helpful.

  4. Many thanks for the links.
    The speech is interesting, but was Haldane saying this stuff when the boom was on? And not much seems to have happened in the 18 months since the speech was made.

  5. I wholly accept your point in your interview that the control of credit in general, and interest rates in particular, because these are in a sense common goods, ought to be under democratic control. But if, as is apparent, our politicians and financiers live in a cosy wee world where they can support each other at the expense of the rest of the population, how is this democratic control to be exercised? We don’t seem to have any existing institutions that are up to this job.
    I’d also like to make the point that it is only you and a few others who discuss these issues. Inspired by reading your blog, I recently taught myself about money, and the facts are indeed quite stupefying, once you understand them. No wonder people are “intellectually mesmerised”! But I’m 59! We can’t really wait until people are close to retirement age before they understand these things. We ought to be teaching this stuff in schools instead of rubbishy economics courses that bear no relation to actual reality. I’ve never met an economist with any understanding of how the way we organise money bears on people with low-to-middling earnings.

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