The Unfairness of Bailout Money

The unfairness of bailout money seems to be obvious to everybody, especially when a banker’s bar bill amounts to £43,067.50.

To appreciate the illogic requires thinking along the lines of

1. the creation of money

  • Where does money come from?
  • Who has the power to create it?
  • Are banks the only ones who make it by lending it?
  • Why should they stop lending, if the economy needs it?
  • Why do governments borrow rather than create it?

2. the national debt

  • What is the purpose of the National Debt?
  • Who pays for the interest on the National Debt?
  • Who receives the interest payments?

3. the money supply

  • why do the banks refer to Cash as ‘narrow money’?
  • why is Credit called ‘broad money’?
  • where does interest for Credit come from?

4. the Government’s budget

  • income from taxation
  • ‘income’ from borrowing

5. the share of the Government’s budget in the money supply or as part of GDP:

  • the money supply is generally not taken as a benchmark
  • here is a 125-year graph of the Congressional Budget Office
  • in the UK, the share was around 40%, but I have not looked for figures recently.

Here’s an article entitled European bank bail-out could push EU into crisis.

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