Friday, 21 November 2008

Time to Nationalise the Banks Now

Government policy on banks branded "failure" . . . Bank of England "dithering"

The Government's policy towards the banks has been branded "a failure" today as more bad economic news floods the media - from falling stock markets to rising repossessions.

John McDonnell MP, LEAP Chair, said:

"Despite all Government attempts to stimulate the economy, all the evidence points to failure. The billions in bailouts have done little to increase lending, and we are witnessing a startling rise in home repossessions.

"The Government now needs to be more forthright and move towards the full nationalisation of the banking sector to be run in the interests of the British people.

"We can't afford any more dithering by the Bank of England. We need an immediate and substantial cut in interest rates. It is now time for the Government to take back control from the dithering Bank of England."



Anonymous said...

The privilege of creating and issuing money is not only the supreme prerogative of government, but is the government's greatest creative opportunity. By the adoption of these principles, the taxpayers will be saved immense sums of interest. -- Abraham Lincoln

Most of what follows is the work of the extraordinary and admirable Stephen Zarlenga of the American Monetary Institute.

What the administrations proposal is doing is almost identical to what Keynes did during the Great Depression. He insisted that the bailout be in terms of government going into more debt to the banking system, whereas the Chicago Plan by the greatest economists in the nation at that time, was promoting the government to create money (greenback equivalents) instead of debt. . .

"The private sector has failed. The public sector is expected to rescue them, and it will. Therefore the public sector should be in control of the money system to benefit the country."

The main features of the Chicago Plan were:

- Only the government would create money. The Federal Reserve banks would be nationalized, but not the individual member banks. The power to create money was to be removed from private banks by abolishing fractional reserves – the mechanism through which the banking system creates money. So the plan called for 100% reserves on checking accounts which simply meant banks would be warehousing and transferring the money and charging fees for their services.

- The Plan separated the loan-making function, which can belong in private banks, from the money-creation function, which belongs in government. Lending was still to be a private banking function, but by lending deposited long-term savings money, not created credits. In this way they'd restrict an unstable practice known as borrowing short and lending long – making long term loans with short term deposits.

The said...

The question is if the banks were placed under direct control and ownership of the state, which is currently headed by the Brown government, what would the next steps be that could solve the economic crisis? There have already been numerous economies in history with a state-owned banking system - indeed Russia's is currenlty de-facto entirely nationalised.

Robert said...

I agree would you trust Labour with your money answer no bloody way.

Monty Marshall-Field said...

"wouldn't trust Labour with our money" is not the sort of comment that moves the discussion on very much I'm afraid. The point is do you trust the banks with your money?