Tag Archives: banks

A central dysfunction: house price inflation, stagnant economy

[Published at Pearls & Irritations, 7 Nov]

The problem with the housing bubble is not a shortage of housing, the problem is an excess of money. The solution is to restrict the amounts banks can loan. The solution is a credit squeeze. But it would have to be done carefully and the government would have to be willing to spend.

The housing market is rebounding. It is through the slump. The downturn is over and the market is making gains. So say the media reports, written by the property industry. Rising house prices are good.

Except they’re a disaster for everyone else.

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The Little Green eBook

The Little Green Economics Book is now available as an eBook as well as a paperback.

Buy it on Amazon AU, US, UK or others. See more here.

Don’t shy away from the main game

Whether we like it or not, ‘the economy‘ is the main game in today’s world. No matter the good causes we work for, the present economy will very likely be subverting and trampling them.

What if the economy supported our good causes instead of squashing them?

It can. That’s why this little book can help you. Continue reading

A System to Support Healthy Communities: Policy Ideas

Most of us do not want the world our society has become. It is too frenetic, too stressful, too superficial, too unequal, too acrimonious, too violent, and getting worse. Surveys show we want more time with family, friends and community1. More than 90% of us would prefer a greener, more stable society2, where the emphasis is on cooperation, community and family, more equal distribution of wealth, and greater economic self-sufficiency3.

Many studies now show that for a more fulfilling life, and to restore the planet to health, we need to restore connections with each other and with the natural world. Our emotional and physical wellbeing are best served by a small, supportive community and by regular connection with the living world around us. Caring for the natural world requires us, or some of us, to know each locality intimately4.

Local communities can only be stable and healthy if they have a viable local economy. Many studies show local businesses recycle a large fraction of wealth within the community, whereas businesses owned nationally or globally drain wealth to a distant few. For our physical, emotional and spiritual wellbeing we need to tilt the balance back from global to local5. We will still want many national and global activities, we do not need to be isolationist nor 100% locally self-sufficient. However we do need to be in control of the larger-scale activities, and they need to be supportive of strong and healthy local communities.

So we need to think about a different system. Below are some of the things we will need to change if we are to create a system that supports strong local communities, healthy living and a healthy planet.

These ideas may serve as a framework for a Progressive party or movement.

Read the whole essay.

How Banks Create Money Out of Nothing, and Why It Matters

[This post replaces an earlier one, which does not properly reflect modern banking practice.]

coinsmedievalFor most people the question of where money comes from is probably a bit mysterious, that is if the question ever even occurs to them. They might recall that notes and coins are produced at a mint, owned by the government. However notes and coins comprise only a small percentage of the money circulating in a modern economy. The rest exists only as accounting entries in banks and other places. In other words it exists only as numbers in computers. How does all this money come into existence?

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