Archive for August, 2012
Since my post Leveson, the Press and Labour there have been further developments. The Prince Harry photos episode was hardly edifying for the press or the Royal Family. That the Sun editor could claim that publishing these photos of a silly over-privileged young man was somehow ‘about the freedom of the press’ should re-inforce my main point. The primary freedoms most of the current press industry are ultimately interested in are the freedom to make money and the freedom to promote their owners’ interests.
That News International in particular are an organisation whose values are seriously removed from human concerns was re-inforced today by the publication of a seriously awful picture of Cheryl Cole. She had been photographed through a car windscreen bleeding from the nose after an accident. For all the photographer knew at the time this image was taken, this woman had a basal skull fracture and was minutes from death. The fact that she is well known for her celebrity career gives only public prurience rather than public interest to this photograph.
The tendency for the press to close ranks in denial at the overall damage done by a press with skewed ambitions was emphasised yesterday in the Independent editor Chris Blackhurst’s BBC Radio 4 interview on the ‘Section 13′ letter he has received from the Leveson Inquiry outlining the criticisms likely to be made. Read the rest of this entry »
The first instalment of Lord Leveson’s inquiry report into the Culture, Practice and Ethics of the Press is due in the autumn. It’s vital that Labour are ready to argue for a truly free press. We should be well aware that the political right and the press industry itself have major combined interests in adhering as closely to the status quo as possible. Although the issue of privacy was the final trigger for the inquiry, the most important failure of our press is to provide high quality information about current events and a true variety of interpretations of their causes. We need these if we are to make good collective decisions on important matters. The truth-distorting bile that issues from some outlets has had a measurable effect in false impressions left on the public. Read the rest of this entry »
Tim Worstall v. PositiveMoney
I note an interesting little discussion between Tim Worstall and Ralph Musgrave on money creation in the context of the Northern Rock bank crisis of 2007. Essentially Tim was claiming, against the PositiveMoney view, that the failure of the bank was evidence that it was not possible for banks to create money. Ralph’s point was that it is possible for banks to create money if they move ‘in step’, but since Northern Rock was creating money (by lending) faster than other banks this led to its problems.
In fact both Tim and Ralph are ignoring the role a crucial player here: the Central Bank – in this context the Bank of England (BofE).
The basis of our monetary system is money created by the BofE in the form of notes, coins and accounts held by commercial banks with the Bank of England. Let’s imagine a single commercial bank operating in the UK that holds a certain amount of this BofE money. This bank could certainly create additional money by lending up to the point that it could still cope with demands of depositors for banknotes and coin, or to pay taxes etc. to the government. Most transactions, however, would be between account-holders. All the bank need do for these is adjust its deposit records; no reserves would be required.
“Budget Hero” – Public Media’s Most Despicable Financial Propaganda is the title of a great anti-austerity piece by William K. Black on the New Economic Perspectives site. It appears that some very strange and economically ignorant people have designed an on-line game to demonstrate their destructive view of how the economy works.
Bill Black is an expert on regulatory policy and fraud prevention and is the author of The Best Way to Rob a Bank is to Own One.
The ‘Budget Hero’ game is basically rigged to show that only major public expenditure cuts can avoid budget blow-up, irrespective of what the real impacts of those cuts might be. As Black points out, this rules out the sort of negative impacts of austerity we have seen in the UK and Europe. It’s evidently not even possible to adopt a policy of offsetting tax increases.
As I have pointed out before, and this confirms, only dishonesty can defend this type of policy.
Banking as Fraud
I’ve got involved with one or two on-line debates recently in which the issue of money in commercial banking is seen as a fraudulent process by which value is stolen from citizens. Usually the central bank is seen as the government’s enabler in this process, and so to blame for the resultant misallocation of credit or ‘malinvestment’. This is a view to be found among adherents of the ‘Austrian’ school of economics, and ties in nicely with their extreme views of the efficacy of markets and the villainy of governments. Even if they do not believe the only money used should be gold, they believe that its value should be tied to gold and that central banks consistently devalue the currency by setting too low the interest rates at which commercial banks borrow from them.
While the Austrians’ views are so dogmatic as to be fairly easily ignored, there has also been a recent tendency among some campaigners, such as Positive Money or GolemXIV, to blame the current discrepancy between rewards to the rich and punishment for nearly everyone else on the banking’s ability to ‘create money out of thin air’. According to this view the banks then profit from this costless activity by lending it to us at interest, either directly or indirectly via government. Read the rest of this entry »