Bookmark and Share David Boyle is a nef fellow, a writer and the editor of nef‘s newspaper, Radical Economics.

“Future students of history will be shocked and angered by the fact that in 1945 the same monetary system that had driven the world to despair and disaster [in the Great Depression], and had almost destroyed the civilisation it was supposed to stand for, was revived on a much wider scope.”

So wrote the French economist Jacques Rueff in 1964.  It feels much the same now: we would be insane to go back to the same disastrous banking pattern we had before the bail-out, but – thanks to the government – we probably will.

Only a miserable 0.6 per cent of the government’s stimulus package is going on green measures, to genuinely shift the way the economy works.

Lord Mandelson has come out as a born again defender of the financial status quo.

But worst of all, the latest Bank of England assessment shows that, despite everything, business lending to small and medium-sized businesses is down again.  Differential interest rates and fees are both still rising.

Local bank managers who know their community well are largely a thing of the past.

Local bank managers who know their community well are largely a thing of the past.

It has become a lot more expensive to borrow money, even for the lucky few who make it through the approval stage.

One of the many tragedies about the Westminster expenses scandal, as Vince Cable pointed out last week, is that it robs MPs of the moral authority to tackle our dysfunctional banking system.

Ministers daren’t say anything too interesting, or too bold, in case heir colleagues assume they are throwing their hand into the ring for the Labour leadership.  It is a miserable prospect, and it may guarantee a swift return to banking business-as-usual.

To start with, it is time we broke the all-party consensus that somehow the government can use their holdings in the big banks to kick-start local lending again.  It hasn’t worked, and seems unlikely to work any time soon.

This is not only because banks won’t lend, but because they can’t lend using their current infrastructure and systems.

They have been consolidated to the point where they point towards the speculative economy and have little local lending infrastructure left.  Their lending decisions are taken by computerised systems which, because we are in a recession, naturally recommend against.

There are no longer bank managers, or local staff with the authority to pick out the success stories, using their knowledge of their local economy.

Our businesses are now in a far weaker position than American or German competitors, and potential competitors, because we have no equivalent lending infrastructure.  There are only 170 branches per million people in the UK, compared to 520 in Germany and 960 in France.

Now that the elections are over, this is what politicians need to do immediately:

money matters Why is this still not top of the agenda?  I think this is partly because, in this country at least, people don’t understand the money system.  Their mental map of it is nearly a century old: safe reliable Captain Mainwaring and vaults full of money.

I was assured some years ago by the Washington correspondent of a national newspaper (admittedly it was the Sun) that all money is based on gold.  It hasn’t actually been since 1931.

This is my excuse for writing an accessible guide to the way money works: Money Matters: Putting the Eco into Economics.

I hope (no small ambition this) that it might help dispel some of the bizarre mystique that bankers continue to exercise over the minds of the English.  Because what we really need to do is abandon the idea that our current useless system was somehow placed there by God, and demand the new local banking infrastructure we need.

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