Deborah Orr • http://www.guardian.co.uk/business • May 4, 2012
Surely, if the government got into lending money instead of borrowing it, the public sector could create wealth, too.
I’m certain all kinds of experts will tell me why, but I cannot for the life of me understand why the private sector has all the dibs on fractional reserve banking, and the public sector none. Fractional reserve banking is the wheeze whereby the more money a bank lends, the larger its assets become. It’s the reason the private sector is so great at “creating wealth”. It simply has a mandate to do so. But the private sector completely sodded up their goose that laid the golden eggs by lending too wildly to people who couldn’t pay it back. Now the problem is that they are lending too cautiously. Surely, if the government got into lending money instead of borrowing it, the public sector could create wealth, too – wealth that could wipe out the deficit? I’d move my mortgage to such a bank, and I’m certain that plenty of others would. Unlike private banks, this public bank would have the same institution underwriting it as does the lending. So caution, not risk, would be built in. Cool. The right is always complaining the left has no solutions. What on earth is wrong with this one?
Read the article here.
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