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Mikhail Liebenstein

Pump Prime The Real Economy

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There have been some interesting discussions over the last few weeks as public sector cuts ensue.

The theory has also appeared that the reason pressure was being put on the UK's credit rating was because  it would force public sector cuts which would then free up money for a future bank bailout.

I can see some truth in that, and right now the banks are still being bailed out, effectively being given very cheap money by the BoE which then then loan to the Government at higher interest rates.

This of course proves the point that the banks are useless and do not actually create wealth.  They may make a lot of money at times, but that isn't representative of wealth, it representative of an inflationary tax on the rest of the economy.  As banks lend, they receive interest, as the lend more and inflate prices, they receive more interest other things being equal. Of course at some point the real economy is weighted down with debt repayment to the parasitic banks and of course the second parasite the Government

Surely what we now need to do to fix things is to allow the private, economically productive part of the economy to out grow the banks and public sector.  My suggest then is that the BoE shuts down all loans to the UK Banking sector and instead loan directly to industry and private individuals, if the banks then want to borrow, they'll have to pay a rate of interest to the savers, but hopefully many of the people receiving cheap loans will pay down more expensive dent and invest in new business activities.

I am guess this might be a tad inflationary, but it would generally inflate private sector non banking income and thereby relieve the drag on the economy.  A few banks of course go pop, but that should have happened anyway.

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  • 395 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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