On Tuesday evening, a major step forward was made. Robert Peston, the famous BBC presenter on everything to do with finance, actually used the words ‘fractional reserve banking’ on national television!
That’s the system that the banks used to create £1.2 trillion of ‘funny money’ over the last ten years.
It’s the system that is so unstable that taxpayers have to prop it up with a subsidy worth £100bn a year (according to the Bank of England).
It’s the system that has buried ordinary people under a mountain of debt, and which caused the crisis we’re all paying for now.
It’s so poorly understood that in all the millions of words of coverage of the financial crisis, not more than about 5 mainstream journalists actually figured out the root cause.
And now Robert Peston’s talking about it on national television. Finally!
You can watch this documentary on BBC Iplayer until Tuesday 25th January here . (For those outside the UK, there’s currently a version on YouTube here). [Sorry, no longer available. Try a search of YouTube. If you’re desperate to watch it, send us an email – we might know of a copy online somewhere].
Note the contributions from Toby Baxendale, chairman of the Cobden Centre, who also spoke at the Positive Money student conference.
Ignore Paul Tucker’s suggestion that we need fractional reserve banking to allow people to borrow for the long term – that’s a naive misunderstanding for the second in command at the Bank of England.
After you’ve watched it, leave your thoughts below.