Tag Archives: Banks

Men in Black

Sir James Faulkner QC regarded juries with disdain, thinking the uneducated hoi-palloi who now sat on them as being incapable of grasping the finer points of common law and particularly those involving finance and economics. Nevertheless, he had just delivered what he considered to be a flawless case for the prosecution. His innate hubris convincing him that the lucid presentation and eloquence of his delivery must surely have convinced even the simplest mind on the jury of the defendant’s guilt. Sitting down he brushed the front of his gown, a preening habit he had developed since taking the silk, smiling self assuredly whilst nodding to The Honourable Mr Justice Pettigrew, confident that he had impressed the judge. In his own mind at least, the outcome of the trial in his favour was assured.

Aware that the jury shared his ennui after having endured such a marathon delivery Mr Justice Pettigrew looked at the pocket watch that he always placed on the bench before him, relieved that it indicated a suitable time for him to call an adjournment until the following morning.
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The Budget Deficit – The Record

The role that economic theory plays in the creation of money — even if understood by a government —  is ignored in favour of economic manipulation for the purpose of a fiscal policy. Self interested post war governments have little interest in the social responsibility that Peter Drucker applied to a private enterprise.

“The first responsibility of business is to make enough profit to cover the costs for the future. If this social responsibility is not met, no other social responsibility can be met.”

Peter F. Drucker, The Practice of Management (1954)

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Funny Money? (SNAFU)

On Thursday 20th November Parliament will debate ‘Money Creation and Society’ (pdf). This is probably the most important economic debate to precede a general election since the Banking Act of 1844 and one which most politicians would like to avoid. While the majority of the public may not know how money is created, the fact that most politicians do not have any understanding of ‘money creation and how we arrived here’ ought to be of great discomfort to them. These politicians being the very people in control of the economy. Read more of this post

Doctor Faustus I presume!

The mantra of the previous New Labour Government was that it only borrowed money to invest. All borrowing became an investment and while the mantra may not be chanted by the present Government, the borrowing philosophy continues. Most people (I assume) would define an investment as:

An asset or item that is purchased with the hope that it will generate income or appreciate in the future. [Investopedia] Read more of this post

Don’t bank on it!

The 1979 Banking Act introduced by the Labour Government, was the first UK Banking Act to put banking regulation on a statutory footing. ‘The words “bank” and “bankrupt” date from the 13th century when it was bankers bankrupting banks. In the 21st century, bankers are still bankrupting banks. But it is no longer just banks. In England and Wales alone, over half a million individuals and nearly 100,000 businesses have found themselves in insolvency since 2007. Internationally, a growing number of sovereign states face a similar fate’. [2011 Andy Haldane – Control rights (and wrongs)] Read more of this post

Crises & Credit

A recent article; 138 Years of Economic History Show that It’s Excessive PRIVATE Debt Causes Depression, states that government debt – over a certain level – does matter as it forms a drag on the economy, but private debt kills it.

Focusing on private sector debt (credit), the article referenced a National Bureau of Economic Research (NBER) working paper, The Great Leveraging, which analysed 138 years of economic history in 14 advanced economies. Read more of this post

Ranking Banking!

Banks do not wait for a customer to deposit money before they make a new loan. Loans are made and recorded in a customer’s account as a debt to the bank. A customer’s debt also becoming a bank asset. The concept of ‘fractional reserve banking’ recognises that banks can lend out many times more than the amount of cash and reserves they hold at the central bank. This implies a strong link between the amount of money that banks create and the amount that they hold at the central bank. Something that is not true, any more than the assumption that the central bank has significant control over the amount of reserves banks hold with it. Read more of this post

Money Creation

The New Economics Foundation(nef) have published a guide to the UK monetary and banking system with the title ‘Where Does Money Come From?’. It contends that there is widespread misunderstanding of how new money is created, which may imply that the only widespread understanding of ‘money’, lies in its purchasing power. Drawing such an inference from the book seems reasonable. Read more of this post

Money money money….

My seeming obsession with money relates essentially to those who, like me, are living on a fixed income with limited disposable income or residual income and wealth, knowing that my cash (money) is not  ‘secure and sound’. However; in an effort to ‘lighten up my posts’, I set out to write an amusing piece on the subject of money, instead the following lead from Adrian Ash – The Daily Reckoning – Australia provided the scenario for a true life black comedy. Read more of this post

Artificial Intelligence and Fiat Money

Is it bird? Is it a plane? No it’s a bid! introduces algorithmic artificial intelligence (AI) with examples that include some fictional AI robot scenarios and some recent real life occurrences. In researching material for the post, two things stand out. The first is the fictional human to AI-robot interactions, scenarios where humans interact with artificially created intelligence endowed with human attributes. The second is the ‘real life’ AI-robot to AI-robot stock market occurrences, where multiple artificial intelligences autonomously manipulate stock values, endowed with the single human attribute of seeking financial gain.

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Hello, I’m Ed Conway, Economics Editor of Sky News, and this is my website. Blogposts, stuff about my books and a little bit of music


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