from HuffingtonPost Website
Let's be honest: the banking system is now fully dysfunctional.
It has failed in its primary purpose: to act as
a machine for lending into the real economy. Instead the banking system has
been turned on its head, and become a borrowing machine.
They do so by charging high rates of interest
and fees; by demanding early repayment of loans; by
illegally foreclosing on homeowners, and by
appropriating, and then speculating with trillions of dollars of
British banks are currently borrowing £12
billion ($18bn) a month to maintain existing levels of activity. According
to the Bank of England, by 2011 they will have to borrow £25 billion ($39bn)
a month - and the Bank is skeptical they can continue to raise that level of
They are cutting critical credit connections to and from the vital 'cortex' - the region of the economy responsible for investment and the creation of jobs.
Without a sound banking system and
cheap, carefully regulated credit, the public and private sectors will not
invest in e.g. green jobs or infrastructure. Output will continue to
plummet, and unemployment and poverty to rise.
...to create and disburse credit.
We learned nearly five hundred years ago that a
sound banking system could do just that, stimulating trade and other forms
of economic activity. The effortless and almost costless creation of credit
by both central and commercial banks creates deposits and savings - and not
the other way around.
Deposits and savings are not the result of economic activity; nor is Quantitative Easing. Instead they are the result of credit creation - which can then be used to finance investment and jobs. Today, as NEF's report shows, thanks to the persistence of archaic, neo-liberal economic theories of finance, the banking system has frozen lending and been turned on its head.
The governor of the European Central Bank
declared as much in the FT on 5 September, this year.
In other words, organize, don't agonize.