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Why we disagree with Ann Pettifor

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A couple of months ago, Positive Money's proposals to reform the creation of money were featured by Martin Wolf (the chief economics commentator at the Financial Times). In an article entitled "Why I disagree with Martin Wolf and Positive Money", veteran campaigner and economist  Ann Pettifor responded that the proposal is 'deeply flawed', 'outlandish', and would lead to "a shortage of money, high unemployment and low economic activity".

simonBank lending creates money. If I lend Dad £10, it has to come from my bank account or wallet as cash, thus reducing it, his account will increase. The reverse applies when he repays, so no change in money supply. The bank can lend my Dad £10 from thin air, subject to weak reserve rquirements. The ...

2 weeks ago

DozyHoleTaking your last point of banks being constrained - if only that were true. For me it is self evident that there is much more money/credit than there is reserves or actual stuff backing it. Of course this can be corrected by making stuff cost more, see housing boom. It's not real, it's just creating...

2 weeks ago

SimonAnn's idea of 'thousands of bank clerks' conjures up a 19th century' image of rows of 'Wall Street Scriveners.' We've been there and done that. We also know that if we try to regulate the present set up more then the banking system will create loopholes and use corrupt channels such as lobbying to...

3 weeks ago
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jakeSo how do Bank of England interest rates have an effect on Prive bank credit allocation at all?This is a real blindspot in my understanding of the monetary system.I understand that banks create credit.But what is the realtionship between BOE interest rates and Private bank lending.What are reserves?...

3 weeks ago

simonThe credit multiplier has been shown not to be an accurate description of how the current banking sytem works, although it wrongly still gets top billing in economics text books. Banks tend to lend first, then seek the reserves later to support that lending. The book "Where does money come from" giv...

last month

David CroxtonSurely, if banks just electronically print the money they choose, then they can print the reserves also. It's only ordinary working people who suffer, who are then fooled into thinking they can safely borrow. We need politicians bright and strong enough to both understand the real situation who will...

last month
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bill439Has Coppola never heard of shadow banking. In 2013 its total assets were $21trillion ($67tr in 2007). Wha do they do with them? They lend them and they are outside the commercial banking system....

May 2014

SimonIt is difficult to understand why Coppola and Pettifor think that the existing system has merit when they must be able to see the negative effects it has had in recent times. Coppola has worked for a bank, and raises accounting objections to changing things, when an engineering solution is required....

May 2014

Sanjay MittalFrances Coppola’s claim that “Banks are not fund managers” is a joke. If she looked at the Financial Times she’d find that every large bank “manages” a whole string of mutual funds or “unit trusts” as they’re called in the UK. Indeed, in Laurence Kotlikoff’s version of full reser...

May 2014
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The Power to Create Money is Safer with the State than with Banks

FT response

In any economy there must be someone with the power and authority to create money. This power historically sat with the king and the Royal Mint, until it was transferred to state control under the Bank of England. But now the power to create money sits ultimately with commercial banks, which create new bank deposits as they make loans. These deposits make up 97% of the UK money supply.

Simonio"HM Treasury would still need to borrow funds from the markets if it found that taxes plus the money created by the Bank of England were not sufficient to cover expenditure."Ben-this worries me as it relies on bond issuance and the money as debt model again (as I understand it). The bond market mec...

May 2014

SimonioThe obsession with inflation is always used as an argument against Sovereign Money Creation -infact it is the obsession with inflation figures as a placebo that is at the root of so many issues (in the Euro!). In his book on Modern Money Theory, Randall Wray, as Ben writes above, makes it clear tha...

May 2014

DozyHoleI take it you just read the headline? This is not what they are saying....

May 2014
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