OK, so deflation is the worry. Banks have swung from lending mania to lending depression. They fear to lend to business, because they expect business to tank because of the recession. In taking this line, they are helping to bring the recession about.
Not enough new money is coming in to the economy, so the amount available to make purchases begins to fall. Demand falls, so products stack up, so prices fall. People notice this, and defer purchases in hope of getting them cheaper later on. So a deflationary spiral is established, and the economy slows down further.
Meanwhile, out in the real world, the real economy, there is still a crying need for work in saving and healing the environment, primarily in energy conservation and renewables. This project needs money.
If the banks are too feeble to lend the necessary money, we must look for other sources. One way is by setting up renewable energy funds, attracting private investment for what is, after all, a no-brainer choice. Sure this pulls money out of the banks, but hey, that's the market...
The other way is for the Government to supply the money directly. October 2008 has proved that the Government is the ultimate guarantor of the banking system. Why in the name of all that is reasonable should the Government have to borrow from banks when it can issue money to invest in our real future?
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4 comments:
Reading your blog is quite an education for me.
I have just started reading ‘Creating New Money” by Huber and Robertson which I found by clicking through links from entries in your blog.
On page 16 it says that commercial banks creating new money by credit entries into customer accounts is a cost burden of £66 billion per year to the UK economy – a hidden subsidy to the banks of £21 billion per year and a foregoing of £47 billion per year in revenue to the public purse!
I had no idea.
But in a way it is somewhat depressing – after all, what chance does green economics have when there is this kind of vested interest to deal with??
I have also been reading about the Basic Income Grant in Namibia and saw this-
‘Since the introduction of the BIG, the majority of people have been able to increase their work both for pay, profit or family gain as well as self-employment. This finding is contrary to critics' claims that the BIG would lead to laziness and dependency.’
Do you recommend Clive Lord’s book on Citizens Income? I have been looking out for it for a while and I’ve noticed it is available at the Green Economic Institute (again I arrived there linking from your blog).
JMac
Don't let it get you down. Our time is coming, and fast. Our job is to work out what needs to be done, and feed that into the machine. The machine itself is finding that it needs to change. The vested interests are beginning to fall over.
Basic Income is great. It derives from the idea that everyone has a right to life. Back in the day this would be by having access to a bit of land. I live near the Dolemoors in Somerset, where each year a parcel of land would be doled out to the people. Hence going to claim the dole. Except that after 1000 years of everyone being satisfied with the word "dole", they have seen fit to change it to JSA. As if that would make any difference, given that jobs are about to become so non-existent, they may have to change the name to Non Existent Employment Seekers' Allowance (NEESA).
Unemployment is a total absurdity when there is so much ecological work that needs doing. The benefit system is absurd because it takes away benefit at the point that you find work. You get benefit on condition that you do no work. Crazy.
Citizen's Income gets away from that. It is much easier to get into, and out of, work.
Good point about CI in Namibia. It helps to get away from the "Shirkers' Charter" response that you get when you explain it to somebody.
Here is a chapter from my book Bills of Health over here about Green Work. http://www.greenhealth.org.uk/GREEN%20WAGE.htm
Written in 1995, still relevant.
Green Wage Subsidy is a way of getting around the "Shirkers' Charter" objection. Explain later.
Thanks for your interest.
This is a link to Green Wage Subsidy:
http://www.greenhealth.org.uk/GreenWageSubsidy.htm
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