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Roman Abramovitch

How To Create A Banking Crisis By John Redwood

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This just about sums up the present fiasco!

How to create banking problems

Published by John Redwood under Blog

Step One: Before an election, government changes inflation targets - as a result interest rates are kept too low

Step Two: Government and monetary authorities watch as private sector borrows large sums of money at very attractive rates, to lend on and to create new funds. Monetary authorities allow plenty of cash to be available in the markets to allow this to happen, and fail to issue clear warnings.

Step Three After an election authorities realise inflation is going up too quickly, so they drive up interest rates to rein in credit.

Step Four: Chancellor gives interview accusing the banks of lending to people without checking if they could repay, and calls for a return to “good old fashioned banking” implying there is something wrong with modern banking.

Step Five Someone decides to publish the fact that a particular institution may need the lender of last resort facility at the Bank of England.

Step Six: Authorities watch TV to see queues forming as depositors ask for their money back.

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