{"id":7019,"date":"2015-04-02T05:31:11","date_gmt":"2015-04-02T10:31:11","guid":{"rendered":"http:\/\/olduvai.ca\/?p=7019"},"modified":"2015-04-02T05:31:11","modified_gmt":"2015-04-02T10:31:11","slug":"the-bank-state-bargain","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=7019","title":{"rendered":"The Bank-State Bargain"},"content":{"rendered":"<h3 class=\"entry-heading\"><a title=\"Permanent Link: The Bank-State Bargain\" href=\"http:\/\/www.feasta.org\/2015\/03\/31\/the-bank-state-bargain\/\" rel=\"bookmark\">The Bank-State Bargain<\/a><\/h3>\n<p><em>\u201cI react pragmatically. Where the market works, I\u2019m for that. Where the government is necessary, I\u2019m for that. I\u2019m deeply suspicious of somebody who says, \u201cI\u2019m in favor of privatization,\u201d or, \u201cI\u2019m deeply in favor of public ownership.\u201d I\u2019m in favor of whatever works in the particular case.\u201d\u00a0J K Galbraith<\/em><\/p>\n<p>There\u2019s no getting away from it. Banks create money out of nothing when they extend loans and then charge borrowers interest on this newly created capital. The result is an ongoing multi-billion pound\/ dollar subsidy breaking the basic rules of capitalism. What is perhaps even more surprising is that there appears to be no explicit description of the \u2018bargain\u2019 underlying this important arrangement. What follows is an exploration of elements of a possible rationale for an unspoken agreement.<\/p>\n<p>Until quite recently there was surprisingly fierce argument over the way in which money is created. Thanks largely to\u00a0<a href=\"http:\/\/www.positivemoney.org\/how-money-works\/how-banks-create-money\/\">determined and repeated enquiry<\/a>\u00a0by monetary reformers [1] and propogation of the issue via social media, there is now consensus over the role that private banks play in originating money in the form of loans, essentially ex-nihilo \u2013 out of thin air.<\/p>\n<p>Recently the Bank of England somewhat belatedly\u00a0<a href=\"http:\/\/www.bankofengland.co.uk\/publications\/Documents\/quarterlybulletin\/2014\/qb14q1prereleasemoneycreation.pdf\">broke their silence<\/a>\u00a0and joined this consensus via an in-house publication on the subject [2]. So we have a little light shining in on the phenomenon of which J.K. Galbraith in 1975 wrote: \u201cThe process by which banks create money is so simple that the mind is repelled.[3]\u201d<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Bank-State Bargain \u201cI react pragmatically. Where the market works, I\u2019m for that. Where the government is necessary, I\u2019m for that. I\u2019m deeply suspicious of somebody who says, \u201cI\u2019m in favor of privatization,\u201d or, \u201cI\u2019m deeply in favor of public ownership.\u201d I\u2019m in favor of whatever works in the particular case.\u201d\u00a0J K Galbraith There\u2019s no [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[52,56,4561,538,1309],"class_list":["post-7019","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank","tag-bank-of-england","tag-jk-galbraith","tag-money-printing","tag-state"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7019","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7019"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7019\/revisions"}],"predecessor-version":[{"id":7020,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7019\/revisions\/7020"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7019"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7019"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7019"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}