Saturday, February 14, 2015

The Greens get it and are boldly going with it

The Green Party is intellectually well ahead of the other parties in policies for economic justice and fairness. Their preliminary outline policies are designed to promote a more equal and balanced society and include Citizen's Income (Policy EC730-733); Land Value Taxation (EC 791-793); and Monetary Reform and Community Banks (EC 660-679).

The message from Greece and Spain and elsewhere in Europe is that minority parties are catching a mood that is stirring in the political psyche of ordinary people. Even though the banking crisis hit seven years ago, new revelations of strange and dubious banking practices are just coming into the light. And still the 'legal exemption' from taxes by international firms seems an intractable problem. People are getting truly fed up. Not only perhaps by the brazen unfairness of these things but that none of the dinosaur parties intend to tackle the mess at its root. The Occupy movement has a long way to run still and the fact that the Green Party is boldly rooting around at core remedies for unfairness is excellent news and people are taking notice - membership is growing.  

Andrew Neil interviewed the Green Party leader Natalie Bennett, see YouTube 15 Jan 2015 the 'car crash interview'. Does it matter that she was unable to tell Neil exactly how the cost of the  £280bn bill works out for Basic Income - £72 per week for every citizen? Only a bit - at this stage of the election campaign - so she had to refer him to the Green Party website which will be updated in March with figures to show how this is possible.  Anyway when the time comes for actual figures the Citizen's Income Trust are well able to prove the case and have been working on this for years.

Andrew Neil's interview technique is a rather more benign version of Prime Minister's questions in the House of Commons - he actually listens and responds to the specific answer - rather than, as in PMQs, ignoring the point made and indulging in puerile name calling. But perhaps a little enquiry into the proposed different society that the Greens are planning for - more balanced and equal - might actually illuminate Neil's viewers. At least it would be more revealing and uplifting than PMQs.          

Is Labour near advocating Citizen's Income? The Citizen's Income Trust thinks they could be after reading an article by Rachel Reeves in Renewal.  But no official policy like the Greens.

What about Tory Ian Duncan-Smith's Universal Credit?  Is it a move  in the Citizen's Income direction? The Citizens Income Trust comments that it could easily be morphed into it. 

Renewal also highlights monetary reform so there is hope that Labour is at least aware of such society-transforming economic good sense and justice.

The Lib-Dems and Labour are both pushing for Mansion Tax which is a loophole for full land value tax to be levied on all land. But no party is as principled and clear as the Green Party on LVT, Citizen's Income and Monetary Reform - the three essential economic reforms for fairness. The Greens get it and are boldly going with it.

Wednesday, January 28, 2015

The real QE stands up!

Quantitative Easing has come to the EU - or has it?
Was Japanese QE real QE?
Were US Fed QE and UK BoE QE, real QE?
If these were not QE what were they?
So what is true QE?
Click on the link below and watch the 8 minute YouTube interview of Prof Richard Werner by Nicole Bourbaki as he explains QE as a term which he coined in the 1990s and how it differs from the 'QE' that masquerades as the real thing. If you have only 20 seconds, go from 5m 53s to 6m 13s.

The video is readily understandable by non-financial people. Experts may have difficulty in grasping that their view of central bank options and policy over some years may have been somewhat lacking.
QUANTITATIVE EASING is not what you think - Richard Werner    

Explore the-free-lunch.blogspot, for more of Richard Werner's ideas. Also, see his simple explanation of banking which may surprise you in this series of short YouTube videos. 

Wednesday, December 24, 2014

Clarity amidst muddlement. Richard Werner proves credit creation. PLUS - New YouTube documentary: Princes of the Yen

Has you ever done this? Asked your bank manager for a €200,000 loan 'for research purposes'. That is just what Professor Richard Werner did last year to prove a point that has been absorbing eminent economists since the mid-19th century. An academic battle has been raging for well over 150 years about what exactly banks do when they lend money to customers. It has involved economists of high international standing including Macleod, Wicksell, Withers, Marshall, Keynes, Crick, Phillips, Stamp, Mints, Schumpeter, Stiglitz, Samuelson, Tobin, Klein, Gurley and Shaw and many, many more.

Whilst these notables discoursed around the matter of how banks produce a loan, the banks themselves carried on regardless of academically discerned niceties. The trouble is that over that period many financial crises stemming from bad banking practices have taken place with the most recent one possibly the worst it over yet? Clearly whatever goes for economic policy that has flowed from universities to governments since the mid-C19 has not been very effective in controlling banks which regularly create asset bubbles which burst causing financial disruption. 

So we have high confusion. Bankers seems to know just what they are doing, having made between the crises, extraordinarily powerful and profitable businesses. Meanwhile politicians guided by academics have been chasing around trying to understand what the banks are doing in order to prevent the next crisis.

Into this steps Richard Werner wanting to get to the heart of the problem. Having proved to his academic satisfaction that individual banks create credit, he resolved that a good way to convince others of this particular economics conundrum was to observe it happening in an ordinary bank branch. So with some panache he embarked on an experiment to do just that and to find out which of three historical theories stands up to scrutiny. He was assisted by helpful bank officials, a photographer to capture screen shots and BBC reporter Alastair Fee with a cameraman to record it all. Werner's aim was to cut through the 'hypothetico-deductive' method of the economic establishment where ''unproven 'axioms' are 'posed' and unrealistic assumptions added''. He just wanted to see what happens in a bank's internal accounts when it lends money and so hopefully trace the birth of a loan. This was in Germany on 7th August 2013, when the directors and staff of a small bank enabled him to borrow the €200,000, and the next day when he paid the cash into another account at another bank, just to show it was real money.

You can study the theme and the experiment in a new academic paper just published by Elsevier and the International Review of Financial Analysis. In this Werner (with K.Voutsinas and S.Dhanda) gives the history of how banking as a function has been viewed over the last 170 years by the leading economists of their day. Title: Can banks individual create money out of nothing? The theories and the empirical evidence.  Starting with Henry Macleod (1855) Werner explains three theories of what banks do in passing loans to customers, here generally described: 
Theory 1. They do actually create credit out of thin air and lend it on. 
Theory 2. They do not as individual banks create credit themselves, but the whole banking system 'somehow' does create credit utilising the fractional reserve system, according to the ascertained central bank reserves of the individual bank. The mysteriousness of the 'somehow' problem was acknowledged by eminent economist Mints (1945) who said it 'proved to be one of the most baffling for writers on banking theory'. 
Theory 3.  From two pre-existing sources of money - their equity and deposits of various types - banks lend out only from what they already have. The process being known as 'financial intermediation'.

From the mid-C19 Theory 1 prevailed and now Theory 3 is top. Keynes moved from Theory 1 through 2 to 3.  In very recent years there has been a shift back towards Theory 1. Even the Bank of England acknowledged in March 2014 that individual banks create credit out of nothing.  However as academics seem largely ignorant of this simple fact, Werner wanted through his experiment to prevent a toilsome debate for yet another century about the three theories, with the possibility of reaching no conclusion even then. After all, long ago in 1927 economist Sir Josiah Stamp (Bank of England director) said: 'there is a fair amount of muddlement ...on the apparently simple question : 'Can the banks create credit, and if so, how, and how much?' '.

To Werner's satisfaction the German bank in August 2013 created credit out of nothing which accords with Theory 1. In the paper Werner explains how Theory 2 ( based on pre-existing fractional reserves) and Theory 3 (intermediation of existing money) cannot hold for the loan the bank created for him. He explains that the fractional reserve theory is a half-truth but that the financial intermediation theory now prevalent is quite false.  Werner claims that his experiment  to prove that banks create credit out of nothing is likely to have been the first such in 5000 years of banking history. Its outcome has huge implications as economists and politicians grapple with how to direct this money supply created by banks for productive purposes. 

Over many years holders of the theory of credit creation by banks have been denigrated as 'cranks' and 'agitators' by scoffers who have never bothered to examine it for its scientific veracity. Werner has it that grand economists have brushed aside real truth whilst peddling their own inadequate explanations. Meanwhile banks have done their credit creation work beneath the radar of public gaze, thereby amassing fortunes and leading to the crashing of the financial system from time to time as their bubbles burst. Werner's researches have over many years led him to expect that there is a way to a 'fair, effective, accountable, stable, sustainable and democratic creation and allocation of money' and hopes that 'the awesome power to create money is returned directly to those to whom it belongs: ordinary people, not technocrats.'  Read the paper for his ideas on how. 
Werner has also just launched a film version of his 2003 book Princes of the Yen as a full length YouTube video Princes of the Yen: Central Banks and the Transformation of the Economy.  The theme of this 90 minute documentary is about the power of central banks, in particular the Bank of Japan from WW2 and the post war period to date. There is a terse commentary with historic news clips resulting in a documentary of high forensic quality. It illustrates how US-centred institutions influenced events in Japan and the Far East over a long period and 'how crises can be re-engineered to facilitate redistribution of economic ownership and facilitate legal, structural and political changes' with  a suggestion that the Eurozone crisis is similarly being used to centralise power. The film was issued in November and now has over 30,000 hits. The book was reviewed on this blog in 2009.   
Posted by Charles Bazlinton.

Tuesday, November 11, 2014

ECOBATE 2014 - 3 Lord Adair Turner: Credit creation and its implications

Lord Turner had a problem as the final keynote speaker at ECOBATE 2014 because his slide show went astray en route to the organisers. But we were favoured instead with a bravura oratorical performance such as is rarely seen and heard in these days by the often inept use of PowerPoint. He strode the stage issuing a fascinating flow of ideas, using judicious arm waving to describe the slope of the missing graphs, as needed. One wished that speakers lost their slides more often - it might prompt better speeches and greater audience attention. But our speaker was on top of his subject, so that was obviously vital too.

He acknowledged his debt to Professor Richard Werner:
          'Richard's writings on monetary policy and the importance of a credit focus are absolutely important, and very important to the evolution of my thinking.'    
He recalled a Financial Policy Committee meeting at the Bank of England in the autumn of 2011, where in a discussion about whether the policies under discussion would stimulate credit or restrict credit, he said 'we had to talk about what the credit is used for' but was told very firmly that: 'it was not the role of a central bank to ask questions about the market allocation of credit'.  However, central banks across the world are now actually doing what he suggested then. For example the Bank of England's subsidised Funding for Lending scheme specifically wants: 'incentives for lending skewed towards SME's' (small and medium enterprises), rather than real estate lending and mortgages.

He warned that there is a general understanding that this new tendency is only an extreme passing phase and that we ought to return to the pre-crisis orthodoxy of inflation targeting as the monetary aim, but he said: 'We cannot, we will not, we should not return to that' . Monetary policy in the future must distinguish between the different purposes to which credit is put.

A diversion into different economics theories followed:
a) Private borrowing in advanced economies has gone from 50% of GDP in the 1950s to 170% in 2007. Without reasonably safe debt for railway funding in the C19 we would not have had the mobilisation of capital that drove the industrial revolution. Thus some see high private sector leverage to be good for economic growth, e.g. India at 10%, needs more.
b) Others suppose that leverage and the details of the entire financial system are not important. Quoting Mervyn King:
         'The dominant new Keynesian model of monetaray economics lacks an account of financial intermediation so that money, credit and banks play no meaningful role.'
Lord T. taking us along with him in our bafflement: Surely if interest rates are the main economic tool doesn't that work through the financial system?  It became clearer that the theory contains its own odd irrationality. He said that interest rate manoeuvering to achieve low and stable inflation 'somehow' operates through the financial system, which is understood by it exponents to be rather like a veil which itself is not impacted by the interest rate.  The theory goes that whatever credit creation and lending happened for whatever interest rate and whatever the credit was allocated towards must be optimal. [All very Humpty Dumptyesque - Alice in Wonderland: 'A word means just what I intend it to mean...']

The whole basis of this comes from Knut Wicksell who promulgated a theory of a 'natural' interest rate which policy makers should aim to target so as to prevent inflation. Trouble is no one can observe what the natural rate is so central banks use the policy interest rate to try and achieve low inflation and assume that credit in the economy is optimal.  This relies on two assumptions that are mistaken. Undergraduate text books often do not contain details of banking and finance but if they do they state that banks take deposits from savers and lend it to entrepreneurs. This is a mythological understanding of how banks and capital markets work. The truth which was fundamental to Hayek and to Schumpeter is the understanding that banks create credit money and purchasing power. They do not lend pre-existing deposits.   If this is not understood we cannot understood the real economy.

Lending can be used for capital investment, for consumption and for buying assets.  He said that over 70% of lending is towards pre-existing real estate and this finances a competition for a scarce, location-specific supply of urban land. The highly misleading text book role of banks: to intermediate household savings into productive business investment is a minor function today.

The emphasis on real estate lending creates a cyclical pattern which is self-feeding. Banks experience few losses as the boom starts and are able to lend more and the rising prices enable them to extend even more credit. Hopeful property owners, fearful of losing out add to the pressure. This is at the core of financial instability and the crises of the last 50 years. Whether in the UK, Japan, Sweden and Norway and elsewhere world wide, real estate credit is the root cause.  Post-peak, borrowers become determined to pay down their over-leveraged debt and withhold investment from elsewhere and the deep recession we are now experiencing endures. 

How do we get out of all this debt? It gets moved around the economy. For every % point of private debt reduction we get a raised % point in public debt because tax revenues are reduced due to recession and welfare has had to rise. All public policy levers are locked off. We worry about how to pay back the public deficit, we try and stimulate the economy by reducing interest rates without the desired response. So why have the low interest rates failed to bring inflation? The answer is the use to which the credit is put. He cited Richard Werner's book (New Paradigm in Macroeconomics) and his studies on the disaggregation theory of credit. The rise in credit for assets and particularly for real estate is a good indicator of future financial crisis but not of inflation in the real economy.  In these circumstances the tool of inflation targeting using interest rates is not usable. To raise interest rates from 5% to 5.5% to dampen property price rises of 10% would be ineffective but to raise them to 10% would cause serious damage to the rest of the economy. He mentioned the failed experiment by the Swedish Riksbank (see this blog) as evidence of a central bank that tried this.  

He wants central banks to set risk weighting far higher for mortgage lending than banks would set for themselves, to take account of the social risk; to use loan-to-value limits; and to introduce a new type of bank with restricted property lending powers but enabling productive lending. He ended on the emphasis that the differentiation of what credit is to be used for 'should be, will be and must be' a permanent part of the financial scene.

In the questions session following I put it that,  frequently in this ECOBATE event the root cause of the crisis was mentioned to be property and real estate lending and speculation. Would the panel comment about the use of land value taxation to restrain the tendency to use credit in the property market and 'remove speculators' asbestos gloves' so that they wouldn't speculate so readily?
Lord Turner acknowledged, as Thomas Piketty has shown (Capital in the 21st Century) that wealth disparities are strongly correlated with increasing urban land values. He thinks tax favouritism such as exempting property gains from capital gains tax is a public policy making the situation worse. But that public policy could 'lean against' the situation by using Henry George's land value tax. He said we should be aware of possible effects from changes in public policy that cause instability in the economy and the need to offset those effects with other changes.
Sir John Gieve said that we should not think that hitting property for tax in place of VAT and income tax is possible, due to the public debt overhang which needs servicing. But yes, property taxation will increase along with other types. In an interesting follow-on point, Richard Werner said, regarding the high government debt and the high taxes needed for servicing it, that this arises from our debt-based monetary system.  He is a well known advocate of  a debt-free monetary system (YouTube) that would reduce much taxation.

POST CONFERENCE news item, Lord Turner 11 Nov 2014 in the Financial Times:  Print Money to fund the deficit  states: 
           'Government deficits should be financed with new money created by the central bank and added permanently to the money supply. ... There are no technical reasons to reject this option, only the fear that once we break the taboo, money financed deficits will be used on too large a scale'.  
He sees such a policy is inevitable, thinking that current QE policies may be even more risky. He thinks the above would bring a return to normal interest rates which would counter highly leveraged financial engineering caused by low interest rates.   

Reported by Charles Bazlinton from the ECOBATE 2014 event in Winchester 8 October 2014.  

Friday, October 31, 2014

ECOBATE 2014 - 2. John Kay: Have Banking Lessons been Learned?

Prof Don Nutbeam, Vice-Chancellor of the University of Southampton introduced Prof John Kay whose talk was headed: 'Have Banking Lessons been Learned?'. He can also be seen on a video interview  given to Information Daily at Winchester Ecobate 2014.

He wants structural changes to the banking and financial environment rather than more and more detailed regulations and rules of the type that were in place in 2007/8 when the crisis hit and which failed to stop it. He thinks that another crisis might have to be endured before we put in place what is needed. The total sum of financial derivatives is around £700trn which nonsensically is three times the value of the entire world assets. Only about 3% of the £7trn of all bank balance sheets is used for non-financial i.e. productive, real economy purposes. John Kay proposes that the activities of finance be separated out: a) utility/ useful / payments / and such boring activities; and b) the rest such as buying / selling and casino-like things. The former are serious and relationship based and the latter are buccaneering, speculative and transactional. He spoke of the high speed cable link between Chicago and New York built costing $300m which achieves an advantage in time of 0.7milliseconds to the traders who use it. Such business bears little connection to ordinary life. 

Historically stock exchanges came about when huge capital amounts were needed and savings were widely dispersed, in order to fund such as railways, automobile manufacture and brewery plants. Nowadays large capital amounts are not needed for start-ups. There is a need for finance to cover new business's losses, but when such as Facebook came to public offering and raised $16bn there was some perplexity as to what to do with the money!   The knowledge economy generates its own cash rapidly. 

He sees a particular mix of themes and players in current entrepreneurial activity. Basic research funded by governments, university involvement, previously successful businesses providing capital and local banks for local capital needs. Regulation should be used to help bring about the above - but not of a type with ever more detailed rules of the kind envisaged through Basel 1, 2, 3, etc.
Charles Bazlinton reporting on the 2014 European Conference on Banking and the Economy. Winchester, UK.  8th October 2014     

Thursday, October 16, 2014

ECOBATE 2014 -1 Charles Goodhart and global trends

A single conference (2011) might be a one-off. The second (2013) a mere coincidence. But with number three (8 Oct) comes a strong hint that ECOBATE is now established in the sustainable economics and finance world. Prof Richard Werner (University of Southampton), again performed his conference double-act, providing a packed day for finance and economics people with dozens of academic papers and a keynote address from Prof Charles Goodhart; this was followed by an afternoon session to which the general public came too, addressed by eminent speakers such as John Kay, Lord Adair Turner, Sir John Gieve and Ralf Barkey. We are seven years from the near collapse of the financial world. Is the crisis over?  Or only just for now? What did ECOBATE 2014 add to the debate?

Charles Goodhart told us (in his academic session Keynote speech 'Monetary Policy and Long Term Trends') that as a reaction to some of the colleagues he meets who - for the purposes of making money -  'have an attention span  of hours or days', he would give us an overview of decades past and future. He told us to be wary of the view: 'What has happened will happen', for this will be increasingly inappropriate for the next 10 years or longer.

For about the last 30 years the world's labour share of GDP has declined due to a massive increase in the the numbers of workers per head of population. Factors in this include: improved education, decline in the fertility rate, women's rising incomes, longevity increases and the decline in retirement age. The increased supply of labour exerts a downward pressure on real wages so that, e.g. in the US from 1980, wages have been virtually static. Additionally, if production has been able to relocate abroad for reasons of lower labour costs it has done so, again restraining wages back home. A consequence of this is the almost total disappearance of private sector trade unions. Prof Goodhart called the phenomenon a 'demographic sweet spot'. Inequalities between countries is falling but within countries is rising.

Labour-saving innovations also bear down on labour needs, and capital needs too are much lower for firms like Google, Apple and Amazon compared with the old technologies such as steel mills and oil refineries which needed 'massive great chunks of capital'.

Turning to policy implications of all this, weak consumer demand due to the relative lowering of poor consumers' wages helps reduce inflationary pressure. Rich consumers however - running out of the need for yet more consumer goods - pour their spare income into assets which is encouraged by the low interest rates of an easier monetary policy. This real estate wealth does not stimulate the real economy, as people don't spend the increase in their house price. Generally the trickle-down effect to the poor through making the rich richer via monetary policy is pretty limited, as is its effect on business investment. What easing monetary policy does in lowering interest rates, is to raise asset prices, particularly house and land prices - housing finance is most susceptible to it; and, except maybe in the US, house prices have gone up more than wages and incomes: 'shot up compared with the nominal compensation index'.

Unable to afford the credit needed, first time house buyers are left behind, especially if their parents aren't rich enough to help.  He said it was not just a 'London effect' but world-wide. First time buyers are in a dangerous position being only able to afford a relatively small deposit, with the rest as debt and if anything goes wrong, if prices collapse, they are 'really totally screwed'. He cited Mian and Sufi's book House of Debt who say that in those circumstances consumption collapses as people try and keep their households together. This comes from a combination of weak labour and first-time buyers in trouble, all flowing from the lax expansionary monetary policies.

The Bank of International Settlements (BIS) wants the loose monetary policy to end and to regain more normal house prices to incomes. Objections are that practical politics does not allow this through monetary policy means - so what else can you do? What fiscal policies might address the problem?  With pressures due to the increasing numbers of the elderly needing costly care and with high debt levels, possibilities are few - so what might be done?  'Structural reform' is mentioned and often these measures are little more than 'let's hope something turns up', but there are reforms that usually remove the wealth of those who have some monopoly position. As an example is the topical Uber smartphone app which puts potential passengers in touch with car hire drivers and thereby threatens the monopolies that officially registered taxi drivers enjoy which guarantees their income and wealth. He would like the use of a covered bonds system for backing the mortgage market as in Denmark .  Another solution from House of Debt (ch 12): shared responsibility so that borrower and lender would take equity and debt. He recommended that the government enter into such a system to require an equity share by the lender and to provide one. As an example he commented that the government's Help to Buy scheme had just such an equity share arrangement and he is a strong supporter of it an wants it to be continued and increased.

He thinks that the easier monetary scene and associated property problems will continue for a bit but demographic changes will lead to transformations ahead. The Support Ratio (workers per dependant, where the higher the ratio the greater the number of workers per dependent) will generally drop having peaked in about 2010 for most emerging countries. China will experience a reduction of workers and this will have inflationary results. For India however, the ratio will rise to 2030 as will Africa to 2050. Japan had a rising ratio to 1990 and is now falling. Economic growth (see Demographic Dividend) accompanies a rising ratio which occurs due to reductions in child mortality, leading to fewer births. Assuming good governance (as China with its competent administration, good infrastructure, hard working people and education) this enables the new workforce to participate fully - the demographic sweet spot. But there is a rapidly reversing demographic dividend in Japan, Germany and Italy, with a slower decline for the UK, US, Australia and Canada. The reason being that the number of workers is in decline and each worker is having to support elderly parents. Japan has been there for some time, US is projected to be relatively benign but Germany will experience a large drop - all this based on UN data and assumptions about immigration.

The structure of the international monetary system  whereby: 'China, Japan, Germany and the oil producers have been running massive current account surpluses and the US has been running massive great deficits. This isn't going to last that much longer because demography is going to change this dramatically'. During the demographic sweet spot when worker numbers increase rapidly, people save a lot and the savings ratio collapses when those demographics change, e.g. Japan (has done) e.g. China (will do). Current account surpluses will go down as the savings ratio declines. Additionally if the measures to achieve constraints on global warming are successful in bringing cheaper and more efficient renewables, the value of  hydrocarbons will drop, leading to the oil producers' current account surpluses disappearing too.  He predicted that from 5-15 years time there will be a swap whereby China, Germany and oil producers will move from surplus to deficit and the US, due to demography, 'is going to sweep from being the major deficit country to being the major surplus country'.

The demographic changes leading to a world savings decline will reduce investment, but residential housing investment (despite declining population) less so because the income elasticity of demand for housing is very high. Business investment is low because labour is cheap, but with fewer workers in the future labour will become more expensive and capital investment will increase to get more output from an expensive workforce. Tax rates on workers will go up. We can only consume what we produce and production each year depends on workers producing; if there is an increasing army of the old and if society believes that the consumption of the old to consume should be equal to that of the young, something has to be taken away from the workers to cover that. Thus we will have increasingly scarce labour subject to an increasing proportion of tax - all this within about 20 years. Real interest rates will rise as savings decline. We don't know what will happen to growth as productivity and innovation are unknowns. Robert Gordon (TED Talk) thinks the easy innovations are over. Output per worker will remain stable but rate of growth of output and consumption per head will decline.

'The world is going to change in the next 10 years - don't assume it's going to be the same as the last 10. It won't !'
In questions: Richard Werner asked if CG thought that as one of the influences on economic matters is credit should we be more careful in future to focus on productive credit rather than financial and asset credit? Designing the banking system in order to help reverse current problems would produce a more equal income distribution, among other things.

CG: 'We need to think very carefully about the structure of our financial system' . It was a great pity the building society system collapsed. If it hadn't happened we would all have been in a much better position. As to banking the old idea was that your assets should not be of a much greater duration than your liabilities - the old Real Bills Doctrine -  as a banker you invest in bills of exchange, lending for short term inventory and don't lend for long term capital purposes such as mortgages. Such traditional banking 'would mean that the banks would play a smaller role - not necessarily a bad thing' . The narrative of the great financial crisis was all wrong, being:  'bad banks, doing naughty things and bailed out by taxpayers'. However: 'the real narrative was that it was a failure of the housing finance nexus, how housing finance works, and we have done virtually nothing to reform that, so we are still in difficulties.'

To a questioner asking for his comments on the Islamic mortgage which involves the lender buying the property and the borrower taking a gradually reducing lease on it, Mr Goodhart said it is very similar to Mian and Sufi's ideas for shared responsibility mortgages.

Prof Goodhart's talk was a grand sweep across generations and national and world economies and was a valuable wide-angle lens view and should be useful to refer to ahead. I puzzled why, having identified the cause of the economic crisis as the working of housing finance, he only commented on solutions that just seem to make normal mortgages slightly safer. No problem with that of course, but what about: a)  land value tax, which would increase the supply of land and housing and reduce price and speculation - an Uber-like measure, see above; or  b) 'window guidance' on credit allocation?   OK, his bit about the Old Bills Doctrine, was a sort of 'subdued yes' to the credit allocation question, but without elaboration - although at that point he did have a flight to catch. So we were left a bit cheated as to his further insights into such solutions.
Posted by Charles Bazlinton. Author The Free Lunch - Fairness with Freedom

Saturday, October 04, 2014

ECOBATE 2014 Conference Programme

The programme for the European Conference on Banking and the Economy (ECOBATE 2014) is to be found on
Click on 'Conference Programme' at top right of page.

At the Guildhall in Winchester, Hampshire, nearly 50 academic papers will be delivered (9.0am to 3.30pm).

At the free public session (3.40pm to 7.40pm) opened by Cllr Roy Perry Leader of Hampshire County Council a Money Question Time panel will be chaired by Prof Neil Marriott, Vice-Chancellor, University of Winchester.
Subject: How would you reform banking?
Panellists: Charlie Haswell (HSBC); Kath Shimmin (Blake Morgan, Solicitors); Fergal McCann (Irish Central Bank) and Wesley Wright (Activist).

From 5.05pm the final plenary will be opened by Prof Don Nutbeam, Vice-Chancellor of University of Southampton and Keynote addresses will be delivered by:

John Kay, Financial Times: Have banking lessons been learned?
Sir John Gieve, former Deputy-Governor Bank of England: Is structural reform of the banking sector needed?
Ralf W Barkey, President Rhine-Westfalian Association of Cooperatives, Germany: People's Banks and Raiffeisenbanks in Germnay - A model for Europe?
Lord Adair Turner, former Chairman FSA, Senior Fellow INET: Whither Monetary and Banking Reform
Prof Richard Werner, Director, University of Southampton CBFSD: Needed policies to Reform the UK Banking Sector

Prof Werner will conclude with: Local Banking - what have we learnt?

Bookings may be made for the academic and the free public sessions on Eventbrite  but you may just turn up on the day and register on arrival.


Tuesday, September 30, 2014

ECOBATE 2014 Wed 8th October 2014 - Free

3rd European Conference on Banking and the Economy - Open to the Interested Public

The University of Southampton Centre for Banking, Finance and Sustainable Development would like to invite you to attend the Third European Conference on Banking and the Economy (ECOBATE 2014), on Wednesday, 8 October 2014 in Winchester Guildhall, featuring, among others, Lord Adair Turner (former chairman of the FSA), Sir John Gieve (former deputy-governor of the Bank of England), Prof. John Kay (columnist in the Financial Times), Prof. Charles Goodhart (LSE) and Ralf Barkey, CEO of the Rhineland-Westphalian Association of Cooperatives.

The public part of the event will start at 3.30pm, opened by the Leader of Hampshire County Council, followed by a ‘Money Question Time’. The public part will last until about 7.30pm. Several keynote speakers will start to speak from 5pm in a session chaired by the Vice-Chancellor of the University of Southampton.

Panelists and keynote speakers will discuss what lessons have been learnt from the financial crisis (if any), how our banking and monetary system works, and what needs to be done to ensure that banks support the local communities. For further details please see the attached flyer.

We hope to see you on Wednesday next week.

Prof. Richard A. Werner, D.Phil. (Oxon)

Director, Centre for Banking, Finance and Sustainable Development and the ECOBATE Team

Wednesday, September 24, 2014

Guy Standing and the precariat

Interesting that Guy Standing Professor of Economics at SOAS, University of London is quoted in the FT 19 Sept 2014   in a Big Read feature: Equality. He writes about Basic Income (the grant of an unconditional, unwithdrawable, individual and regular income to all):
    ' We should recognise that our individual wealth is due far more to the collective effort of our forbears than anything we do' 
[see the previous Blog here]

You can see Prof Guy Standing in an impassioned inaugural address at SOAS 19 June 2013 on YouTube which is an outstanding argument for Basic Income much of this being an expose of  the historical slide away from empathy and compassion that motivated early and mid-20th century welfare. He majors on the rise of the 'precariat'  - those increasing numbers of us who are living with chronic uncertainties who find themselves without the floor of welfare safeguards any more. The picture is getting darker in our so called advanced countries but he has carried out trials in South Africa and India which have shown the specific transformative outcomes in peoples' lives through giving them an unconditional regular income - such as child malnutrition, weight gain, schooling, economic productivity and health care.  He quotes a minister of Social Development in India that this:
       ' dispels all doubt that the poor will be irresponsible.'  

Guy Standing champions the end product, The Free Lunch - Fairness with Freedom  brings together how funding might work in more detail than Prof Standing was able to cover in his address. 
Posted by Charles Bazlinton

Friday, September 12, 2014

Money for Everyone - Dr Malcolm Torry

Malcolm Torry speaks on the Citizen's Income on a YouTube video .

His Money for Everyone explains. Review to be posted here soon.

My book The Free Lunch - Fairness with Freedom  has a lot on the Citizen's Income - I call it the Citizen's Royalty. That reflects a monetary right earned through citizens working together as a nation  - including our generation - that now enables us all to live beyond mere subsistence. 
posted by Charles Bazlinton  

Tuesday, September 02, 2014

ECOBATE 2014: Profs Charles Goodhart, John Kay & Richard Werner and Lord Adair Turner

The 3rd European Conference on Banking and the Economy (ECOBATE) takes place in Winchester, Hampshire, UK in the Guildhall on Wednesday 8th October 2014.  The format follows the successful pattern of earlier years of an academic conference followed by a free afternoon public session with top rank speakers.

The conference is sponsored by the Bank of England and the theme is Banks as Creators of Money.

For details see the INOMICS website  and for registration to attend go to EVENTBRITE      

This year the Keynote speakers are: 
Professor Charles A. E. Goodhart, CBE, FBA
Professor John Kay, Columnist, Financial Times
Lord Adair Turner, chairman of the FSA 2008-2013
The conference will be led Prof Richard Werner , Founder and Director of The University of Southampton Centre for Banking, Finance and Sustainable Development.

For a series of reports of the 2011 and 2013 ECOBATE conferences start with ECOBATE 2011 and ECOBATE 2013

posted by Charles Bazlinton.  

Saturday, August 02, 2014

Bankers' Oath. Philip Blond, Roger Steare & Sir Richard Lambert

ResPublica's event Virtuous Banking held at the FT might have been better named. On 29 July The Banker's Oath was launched there and Sir Richard Lambert of Banking Standards Review Council delivered the keynote speech . See also this short video interview: Richard Lambert on the Oath.

A better title for the event might  have been Trying to produce Virtuous Bankers. More regulation might merely produce more 'gaming' of the more complex rules, and laws remove responsibility so the outcome might be worse. The core of the problem, mentioned by Philip Blond is the puzzle of how to get people to act in the spirit of the law? As a Christian theologian he probably could have gone a bit deeper but what we had from the panel and the floor were, variously: how rules are being made clearer (rather than 'why are we doing this?'); retail banking is being sorted out a bit (rather than wholesale banking which is the real problem); why has no banker been jailed? (when, since the banking crisis thousands of citizens have gone behind bars for stealing goods to the value of £20 or so from Tesco); et al.

Roger Steare who was one of the Virtuous Banking report's authors suggested that the failure of rules-based regimes stems from the fact that they treat people as moral infants. Our society is democratic and based in social justice but the modern corporation is rooted in neither, being a development from medieval times.  The behaviour of bankers is perverted by performance management targets and 'other fear inducing systems' which bring the dysfunctional results we see. The people who broke the rules did not necessarily gain personally but maybe had a fear of losing their jobs as a reason. He appealed for a debate of how human character might run from social behaviours within families and friendships and be better nurtured to affect all business relationships, including banking.  Evidence shows that the behaviour of 'good people' shifts when they come to work. He called for a fundamental examination of the dissonances between our political system's philosophy and the social architecture of the businesses within it. Philip Blond in a similar vein said that morality is not natural but is taught.

The report has Virtue Thoery as a foundation which involves people being of good character and living out moral teaching in daily habits. If we fail to understand that the crash was partly caused by lack of  this 'virtue' and if we neglect to address this, we are unlikely to avoid further crashes.

Concerning issues of ownership and governance the report asks for diversity of: ownership, scale and access in banking. The shareholder model is gamed by those who can set up share price targets to benefit from - usually short term gains for senior staff - which the mutually owned Nationwide Building Society is not troubled by ('no share price we are watching' Alison Robb).

As a promoter of local banks (declared interest: director of Local First CIC) for me not enough emphasis was placed on the benign, structural advantage of smallness of bank size. The report's solution offered, of Local Enterprise Partnerships running local branches of the British Business Bank (Conclusion 9 page 4 & 30) could help with capital funding but if it is about state-management, that, surely is not what we need?

If the UK had many small, local, independent banks as per the German Sparkassen model -and others worldwide - the crash would have been far less traumatic. The UK recovery is likely to have been more rapid. In Germany lending from local banks increased to small business during the worst of the crisis. With many small banks, 'too big to fail' does not arise, should local problems arise they can be more readily contained and sorted and not spread to the whole system. Small, local, not-for-profit banks suit local businesses and  also guard against the possibilities of dangerous, self-interested employee activity through handling huge funds unsupervised. The outcome of setting up carefully designed, local banks will more certainly expedite widespread virtuous banking than much complex attention given to the giant banks of the UK today.  Local employees running local banks for local customers will have an awareness of what their actions are likely to result in locally, and thus behave themselves.  
posted by Charles Bazlinton. Author The Free Lunch - Fairness with Freedom           

Wednesday, July 23, 2014

Anneliese Dodds MEP - Power to the People?

Interesting to see that Anneliese Dodds MEP (SE Labour) Tweeted yesterday: 
 I also pointed out UK government's failure to shift tax from labour to unproductive assets by shirking from introducing a mansion tax

That was made to the ECOFIN President - presumably Pier Carlo Padoan on this LINK .

She is an ally in the campaign for shifting tax from the backs of those who do productive work and skimming it off rising land values. That is, replace income tax with land value tax ('mansion tax' is good start). To introduce the real thing, start charging land value tax and allow the deduction of income tax from the charge. 

Last October she appeared with Professor Richard Werner on Peter Henley's BBCTV show about Local Banks - see this off screen recording (the BBC iPlayer link has gone). She spoke of the Labour party's idea of big regional banks - let's hope that since then Labour is moving nearer to power for the people and to their local economies through the local bank idea for UK banking. Watch this 1 minute animation about why local banks are important (interest declaration: I am director of Local First CIC).

Posted by Charles Bazlinton. Author The Free Lunch - Fairness with Freedom 

Sunday, July 06, 2014

Two elephants in the economics room

The post-crisis period of low interest rates has boosted asset prices, e.g. real estate and shares, as a deliberate policy to try and make the real economy grow. But don't get confused about 'real' here - 'real estate' (as in 'property' for the UK) is not part of the 'real economy' measured by GDP figures. High house prices are not a meaningful indicator of how well the economy is doing but just an indicator of how the economic policy benefits those with assets. The FT on Friday 4 July, wants  the US Federal Reserve to sort the bubbles: 'Yellen should act on asset bubbles'  but admits that 'the Fed's macroprudential tool kit is limited'.  JY is said to regard 'tighter interest rates are almost always the wrong tool to curb asset price inflation'.

In Sweden an experiment (2010 to date), has maybe proved JYs point - FT 4 July (Richard Milne):  'Sweden's Riksbank changes course with rate cut' explains that Sweden's central bank first raised  the rate from 0.25% to 2.0% by 2011and then lowered it again with a final bump on Thursday to 0.25%. This raising was an attempt to 'stop a nascent housing bubble'. But the nominal house price index is now up about 18% from 2010 -so no great success there. The rate hike was also supposed to counter high household debt but this was ineffective too, as it is as high as before at around 174% of income.

The reason for the volte-face now is a stagnating economy - high unemployment and possible deflation. The bank wants to use 'macroprudential measures' to counter household debt. So these 'stick' measures will be set against dangerous lending practices whilst the 'carrot' measures of low interests rates will hopefully grow the real economy. Will either work?

Lord Turner in this paper Credit Creation and Social Optimality presses for an extension of normal macroprudential policy to include the allocation of credit into those parts of the economy that are socially optimal. He says we cannot leave such matters to the free market - and the asset bubbles that have grown since he said this in 2011 prove his point. He relies heavily on Richard Werner's work on credit creation and allocation by banks as they make their everyday business decisions. See the book: New Paradigm in Macroeconomics.  But no central banker or finance minister is specifically targeting positive credit allocation into specific productive business sectors and this is an obvious elephant in the room being studiously ignored.    

A study dealing with asset prices in the Australian real estate market by  Philip Soos and Paul Egan, with David Collyer (Feb 2014):  Australia’s Land Bubble: The Cause of Unaffordable Housing adds another ignored lurking elephantIt explains that macroeconomic measures are indeed needed, such as (p16): safeguards against excessive mortgage debt (loan to value ratios and others); banking capital and liquidity ratios, thus agreeing with the Riksbank and Yellen. But Soos and Egan also say that an essential way to curb real estate bubbles is land value tax which would (p16)  'certainly lower bubble-inflated land prices...
(p 17). Property ownership and speculation has been elevated to the status of religion in Australia, ...
A prohibitive entry point for housing symbolises a triumph of self-interest over the national good, as benefits flow to those Australians who already owned or invested before prices began to inflate during the mid-1990s. Families entering this grossly inflated market bear a heavy burden: decades of dutiful employment and stress to pay down ever larger debts. Enormous mortgages detract from national living standards, given a greater proportion of household income is diverted to mortgage repayments.
They conclude that a sufficiently large LVT (1%) applied to all land could minimise house price cycles. When such bubbles burst, horrific costs most often fall on the poorest who never gained during the boom. The renter/ homeowner divide is as disquieting an influence in Australian society as it is in the UK.

Whether in Australia or the UK and many places elsewhere, this second elephant of land value gain is ignored and left untaxed for homeowners alone, their gain often having been fed by public infrastructure improvements.  Meanwhile renters pay the tax for the public improvements but receive no compensating gain in land / house prices.     

Friday, May 23, 2014

Hayek - where are you when we need you?

F A Hayek's book The Road to Serfdom is credited by Prof Michael Hudson in his pithy series Insider's Economic Dictionary under R is for Rentier (5 April 2014), with being the 'ideological bible': 

'for subsequent neoliberals such as Margaret Thatcher to dismantle government authority and privatize the public domain....their efforts left a political vacuum, which has been filled by large financial institutions operating globally. Their mode of planning via the IMF, World Bank and Washington Consensus has turned out to be the new road to serfdom by loading down economies with unproductive debt, imposing economic austerity, and using the resulting financial crisis to assert dictatorial powers over government'.

However Hayek also said (Abridged Edition 1944. p.87): 

'Let a uniform minimum be secured to everybody by all means; but let us admit at the same time that with this assurance of a basic minimum all claims for a privileged security of particular classes must lapse.'

Unfortunately by merely letting the market dictate and no Hayekian counterbalancing fairness of a basic minimum income, (see Wikipedia) the new serfdom is approaching by courtesy of the debt that Hudson describes. 

Read The Free Lunch - Fairness with Freedom as to how this might be overcome.


Saturday, May 03, 2014

Thomas Piketty and Michael Hudson on neo-feudalism

In the UK the soaring support for UKIP might be partly explained by voter frustration that no-one is doing anything about the 1% who seem to own and run the world. I'm not sure if this is what UKIP is into (after all Nigel Farage is an ex-city man), but Hey! a protest vote is a way of bloodying noses without causing serious permanent damage. Even government ministers wring their hands and seem unable to stop bankers' bonuses on their stellar flight. Then along comes economist Thomas Piketty who has written a book: Capitalism in The Twenty-First Century. This book would injure you if it were to be flung at you (685 pages), but will it do anything serious if dropped into the capitalist wealth machine? 

According to Philip Aldrick (The Times 3 May 2014) Piketty's solution to the inherent unfairness of capitalism is 'a global tax on wealth'. I don't know if this does justice to all 685 pages, which most reviewers see as a tour de force. On Amazon 317 reviews have been posted after merely 3 weeks and the majority of rankings are 5 star. Words in the first review by Aguadito include ' invaluable.. meticulous...important data...groundbreaking'. So Aguadito liked it a lot.

But a 'Global Wealth Tax? Why does a serious economist come to such an impractical conclusion (if that is the major one)? Why not something more possible such as  Prof Michael Hudson has been advocating for grappling with wealth imbalances. Hudson arrives at the same neo-feudalism conclusion as Piketty but he campaigns for money reform and land value tax on a national basis.  The snag is these would work and the establishment who run things on behalf of the 1% who provide their bread and butter, wouldn't like them as they might really change things. 
posted by Charles Bazlinton. Author of The Free Lunch - Fairness with Freedom

Friday, April 18, 2014

Dr Peter Selby on money reform. London Occupy reaches Winchester. Malcolm Brown, Michael Northcott, Richard Werner

Two years after Tent City was dismantled from around St Paul's in London the ripples of Occupy London reached Winchester last week (9th April) when ex-Bishop Peter Selby delivered a paper 'An alternative to Chaos and Fear' that cut to a core problem of capitalism. This was at the Futures of Capitalism conference at the Business School of the University of Winchester, Hampshire.

Dr Selby said that what guides the religious life stems from God's own character and the outflow from that to society is mercy and justice. The religious tradition is that life is not a gamble, but as a result of a departure from faith which the structure of capitalism represents, the current view is that life is indeed a gamble and its effects are random. We have given ourselves over to the rule of money and allowed it to be given sovereign power over life - that is, to be an idol - with appalling effects on the vulnerable. William Cowper who campaigned against slavery in the 18th century was shocked at the purchase of people as slaves and found it to be wrong in principle and not merely an inconvenient way to have access to sugar and rum. Dr Selby finds that capitalism with its supposed 'free market' as we know it, is also morally wrong, and is not something to be endured and merely in need of being changed at the edges. It is unacceptable. He said that whilst the East German command economy failed it did contain some good ideas that started with concern for the poor. He referred to Psalm 82 with its exposure of favouritism to the unjust and its exhortation to prioritise the needs of the oppressed, the weak and the poor.  

He majored on the creation of money of which 99% is now made by private banks and 1% by the government. Historically it was the sole right of the sovereign to make the full 100%. He compared this with the right of the state alone to have an army - why is money so different today? With banks now having the power of money creation they have power over life, and overrule elected governments. International financial power is sovereign without frontiers, and nation states have less and less control under that empire. Thus is the creation of money the root of the capitalist problem.  Jesus said that the kings of the world lord it over others but that was not to be the way of his kingdom. God's love is to be shared to the ends of the earth bringing inclusion and law. Those who profess faith should: ' rediscover the expression of faith in God as one who offers a different economy, specifically one who replaces chaos and fear with mercy as the guiding economic reality'Dr Selby wants the churches to find ways to bring fairness.

He said that the idea that cuts in welfare to the vulnerable are necessary to prevent dependency, whilst more money for the rich through tax cuts will encourage the rich to work harder, is a crass lie and such untruths must be exposed. Another falsehood is that the power of the wealthy is the key to a reasonable standard of life for all. During the discussion he cited a case where a large donation from The Big Lottery required that it must be permanently commemorated by a fixed plaque.  Whilst such a demand brings 'gratitude in perpetuity' to The Big Lottery as an organisation, the truth behind that system is the fact that the poorest are the biggest buyers of lottery tickets. 

Rev Dr Malcolm Brown who at Church House, Westminster is the Director of Mission and Public Affairs (CofE) gave a response to the talk which he said was a prophetic voice, and asked how it should affect our conversation with policymakers? He spoke of the tension between moral principles and economics, between the coming of the Holy Spirit in the past and the full incoming Kingdom of God at some time in the future and having to live in a sinful world meanwhile.  Illustrating the current scene he referred to Charles Clore's bid for Sears in 1953 as a shock to the city establishment culture, and likened it to a person standing up on the front row of a seated crowd to gain a slightly better view, thus forcing everyone else to stand and become slightly worse off with no compensating gains. But how do you legislate between altruism and selfishness? He spoke of the campaign he was involved in (when a Southampton vicar) that banned Sunday trading - they defeated the Thatcher government - but which is now being challenged. On the current issue of capitalism he thought the only way is to engender a new moral consensus, otherwise the only alternative to free markets is authoritarianism. How do we resolve between the 'society of the strongest' and 'the community of communities'? The moral argument can be seen by those who disagree as toxic. He said that banks are a contradiction in a market system whereas credit unions are robust.  

Professor Michael Northcott agreed that the private creation of credit is a core problem and combined with the market principle it brings money supply chaos. Professor Richard Werner said that the last 50 years of economics used the wrong postulates and axioms and when its supposed aim of achieving a  'Utopian dream world' is attempted by governments, unsurprisingly it fails. As to the Dr Brown's search for a moral consensus he said we already have one! When people are asked if they would agree to a fraudulent money system based on fictional deposits (i.e. the current fractional reserve banking system as it is) they say they would not support such a thing. He asked Dr Brown if he agreed that money creation should be in the public domain? Answer: Yes.

I asked Dr Brown about his view that apart from a new consensus, the only alternative to markets is authoritarianism, in that we at Local First CIC in Winchester are pioneering a community bank which will be a full-licence bank, raising profits for the common good.  As a response to the failure of the capitalist model it is not in any way a product of authoritarianism!  Dr Brown had no problem with the vision - but who decides ultimately, who controls it?

It seemed to me that an answer to Dr Brown's worries are in Dr Selby's appeal for the churches to give a lead and at least dare to support such pioneering efforts.  After all as a vicar he gave support to stopping Sunday shop opening in 1986, why not now, as an elevated church leader give support to community banks in 2014?  

Wednesday, March 19, 2014

Bank of England concurs with Prof Richard Werner's view on money creation by banks

Richard Werner (Professor of International Banking, University of Southampton) has for a decade or two made it quite clear that banks don't receive deposits and then pass them out as loans, rather they make the loans first, out of nothing. See his short video interview: Banking and the Economy and this one: Who creates the Money Supply? 

Now the Bank of England has admitted this is just what happens and in the latest Quarterly Bulletin 2014 Q1:  Money creation in the modern economy spells it out, also repeating the message with a video from the gold vaults of the Bank.

The Guardian has an article (David Graeber, Tue 18 Mar) as the general media suddenly discover the truth about money creation.

There are those who have a vested interest in the mythical convention that it is only the banks who can lend to governments to cover public spending deficits. Those are the bankers whose huge salaries and stupendous bonuses continue on despite the disaster of the financial crisis. The new Bank of England clarity needs to be pressed further. The government need not borrow to cover debt, the government could create its own money debt free and interest free as per another video by Richard Werner

Funny thing, Prof Werner's video messages about money/credit creation have been available since 2011 (see links to the full set). You wait three years for the media to catch on to these secrets about banking and suddenly they have found the courage! The next cause is to follow the Guardian and challenge the austerity theme that the Coalition Govt. is chained to, with its poverty-promoting effects for us all.  Positive Money has been battling away at this theme for ages, and  here is a helpful explanation about the false 'truths' of economic orthodoxy from Ann Pettifor.
posted by Charles Bazlinton. Author The Free Lunch - Fairness with Freedom (about banking reform and much more). 

Monday, March 03, 2014

Rev Paul Nicolson & Prof Michael Hudson - A common answer to austerity

Rev Paul Nicolson is someone who is getting into hot water on behalf of those who live their lives in a dilemma as to whether to heat their homes or eat. At this stage of his battle he is grappling with the bureaucracy of debt enforcement about his non-payment of council tax. Even though he can pay, he is refusing to, but is making a political point to press the Council to charge higher council tax payers more, so that those on the heat/bread line can be relieved of council tax as they used to be.  

A December 2013 post gives his case and a recent update shows that the bailiffs are getting muddled about where he lives, as the Council failed to inform the Court correctly. 

But he says:
'The long term aim must be to abolish council tax and business rates in favour of land value tax.' Tenants would have no liability for any land value tax (owners would) and the sort of bother Rev Paul gets involved in wouldn't be needed due to their income boost. 

Another advocate of land value tax, particularly relating to financial woes of Ireland is Prof Michael Hudson. 
In a recent interview he says, referring to the abandonment of their native land by many Irish: 
You should establish as a basic legal principle of international law that no country should be obliged to pay foreign debts at the price of driving out 10 – 20% of its population, at the price of austerity, and at the price of committing economic suicide.
Nation states are not supposed to commit suicide. But that is what Ireland is doing.
'just read Henry George and The Land Question and you’ll get everything you need to know about why Ireland should have had the tax base on the land instead of turning over the rental income to banks – which then lent it to crooks, who stole it.'

Michael Hudson on Latvia and oppressors:
 'There is a basic motto among oppressors: You don’t know when people will begin to fight back until they actually do. So they are just tightening the screws and tightening the screws. Latvia was a cruel experiment to see how far you could reduce living standards. There doesn’t seem to be a limit.'