Friday, September 16, 2011

Lord Glasman & Duncan Weldon: What about this?

The FT today published my letter  'We must find ways to boost lending to productive activity'
Why must we accept below trend growth? (letter Maguire 5th Sept). The article by Maurice Glasman & Duncan Weldon German lessons for Miliband’s growth agenda (Comment Aug 2) stated that the ratio of credit extended to financial and property interests, compared to productive investment, exceeded 4:1 from 1997-2007.

We surely need ways of actively encouraging lending for productive activity, but ways of reducing it for bubble-inducing activity.
If we don’t actually want to make such loans illegal, a Tobin tax on financial transactions and land value tax on property transactions [see next blog post]seem inevitable in order to give regulators a more controlling hand over bubbles than they have now. New tax revenue through these would enable a reduction in taxes on productive activity (income, vat, corporation, et al) and induce a virtuous circle in favour of growth of the gross domestic product economy.

As to directing loans in order to promote growth, Messrs Glasman & Duncan's article also has lessons from German experience on how the state run KfW bank ‘ensured a ready supply of capital to productive business’. I wonder why our state owned banks are unable to do the same?
Charles Bazlinton

This is a very useful lead into the European Conference on Banking and the Economy to be held in the Guildhall at Winchester, Hampshire on Thursday 29 Sept 2011.  The issues mentioned in my letter will be addressed from the fundamental credit creation and allocation principles that Professor Richard Werner has been researching for over 20 years. 
At 5pm within the free public session Lord Adair Turner will be speaking on 'How can Banks be made Socially Useful?'
Info & registration:  Conference link. 
posted by Charles Bazlinton

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