A not so easy way to deal with unemployment

A columnist in The Guardian wants the British government to use the proceeds from quantitative easing to create jobs rather than to bail out bankers.

If only it were that easy.

As I see it our economy is currently faced with three problems – the deterioration of the resource base, the way in which money is created and the loss of the money supply.

Stimulus spending as advocated by this columnist will use up even more resources and bring forward an economic collapse.

We have to keep the banks solvent because our money supply is based on the loans they make.  When the banks lose money we lose part of our money supply and without money there can be no exchange of goods and services and that will mean even more unemployment.

Quantitative easing is intended to allow banks to make more loans and thus create more money and thus increase economic activity and thus get more employment.

It appears not to be working as banks and large corporations have lots of spare cash but don’t see business opportunities.  This is probably because of the deterioration in the resource base.

I believe there are serious problems in the way in which our money supply is created.  These and a proposed alternative are discussed in the essay “LETS go to market”


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