A few days ago Lynda Blackwell, head of mortgages etc. at the Financial Conduct Authority rose from the deep to suggest that older people in bigger properties should move out to smaller ones to make room for those who need them.
This was a little rich coming from that body given that not long ago our financial regulators botched investigations and prosecutions involving money men who had made billions in ripping off residents in retirement housing and who are still happily engaged in the trade.
In theory, markets should take care of this issue but our "market" in property has been subject to so much government and other action to rig it in many ways that it is not surprising that the housing we need is not what we get nor at sensible prices. Moreover both major parties were firmly on the side of the money men.
Parallel to this the Bank of England chief economist, Andy Haldane, said in Northern Ireland, and this summary is taken from Tax Research blog of Richard Murphy,
Let’s summarise his thinking (as I see it).
First, we’re in for tough times. Second, there is no case for increasing interest rates now. Third, conventional QE has run out of road. Fourth, any alternative to conventional QE has to be monetary policy.
Fifth, this means potentially relaxing the inflation target to 4%. Sixth, even this, to allow sufficient headroom for monetary policy, will require that we have negative interest rates.
And, seventh, that might require the abolition of cash in the economy so that people will be forced to hold money in banks and see its value deteriorate.
Well, I suppose this is what you might get at Threadneedle Street if you work in an unventilated room with the heat full on in high summer. This is the most rational explanation I have.
Cash is a means of exchange necessary to many forms of economic activity. If the state does not issue reliable cash or if it is in short supply people use other things to replace it. You might take away the banknotes and coin but you cannot take away other things.
During the War my grandfather had a nice line in eggs, high in exchange value. An uncle in a cold stores was able to get meat classified as bad but was better than in the local butcher's. My father's engineering works had a good supply of cigarette lighters. The lady down the road who welcomed all those Yanks bringing food was said to be able to make proper coffee, or so I was told.
Cigarettes were a real currency and I confess being a non-smoker I did very well out of my ration when in the British Army of the Rhine, it paid for my first year at University. I could go on with examples from down the centuries.
It seems to have escaped Mr. Haldane that in the real world people do not hold much in banks in fact debt levels are very high. Quite how you force people to hold accounts that fall in value by 4% or more annually is an interesting question. Basically, they take the money out or take on debt to counter it. This is why we have are having hyper-inflation in the property market.
He is suggesting that we try to run an economy in Keynesian terms when according to my vast document on Keynes savings are a critical element in the functioning of his view of the economy What Haldane is saying is that government spending based on debt and central planning, will replace savings and real investment.
Perhaps the Bank of England is planning to replace the statue of Britannia in Bullion Court, above, with one of John Law, see Wikipedia under John Law (economist) and other links.