MPs should read the Bank of England’s report on money creation
MPs unable to prevent another financial crisis
- The boom running up to 2007 was fuelled by the creation of new money by high street banks. Over £1 trillion of new money was created as the banks went on a lending spree.
- The housing bubble is driven by money creation by banks, rather than the scarcity of housing. The £22 billion of new mortgage lending provided in 2013 resulted in £22 billion of new money being creating by the banks and pumped into the housing market.
- Governments can create short-term economic growth by encouraging households to go further into debt, because every new loan from a bank creates money. But this ultimately increases the risk of another financial crisis.
- If households try to pay down their debts, money disappears from the economy. This could potentially lead to a recession.
Educating MPs is a Priority
Notes on the Poll
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