JIM Osborne makes some valid points in yesterday’s article on banks, but it is ultimately attacking the wrong issue (Here’s a monopoly we don’t want in our new Scotland, April 19). The UK problem – and it is especially a UK problem, though the US also suffers from the same disease – is the state and government policies that have been pursued by both parties since the 1970s.

It is state policy to goose the housing market in the UK, and the banks have simply responded to the directions from a higher authority. As a general rule, deposit-taking commercial banks should not lend for mortgages and the like AT ALL. That was exactly why the building societies were set up. They took fixed deposits of one or more years, which gave them the security of being able to make long-term loans (and the would-be borrowers were tied in too).

READ MORE: Here’s why an independent Scotland must take away the monopoly from private banks

You need to have the maturities on your deposits relatively well matched to the maturities on your assets. In the deposit-taking bank the deposits can leave en masse in minutes, which is why granting a 25-year mortgage should be out of the question. Long-term loans (which are also generally illiquid) are exceptionally dangerous for high street banks and have been the cause of most banking crises. 2008 was no exception to that.

Historically, high street banks confined themselves mostly to short-term loans such as discounting bills, overdrafts and the like. Merchant banks were different and they were the place that was more involved with business lending, but merchant banks did not take deposits from the public or run normal current accounts etc.

It is state policy to promote the finance sector and the City of London at the expense of all else. We were “post-industrial” according to the Thatcherites, and industry was disposable.

It is state policy to favour consumption over investment.

It is state policy to favour rent extraction and dubious capital gains and to penalise paid employment and patient long-term investment.

It is state policy to promote excessive personal debt (personal or student loans, credit cards, etc).

You can add much more to that list of wrong policies.

I think if the fiscal and monetary policies of the state are sorted out then the rest will largely, with a bit of pushing and shoving, sort itself out. People and business respond to the incentives, and at the moment those state policies mean the incentives are all wrong. Reforming banks will achieve little on its own.

Dr Tim Rideout
Convener, Scottish Currency Group

I NEVER thought I would be (almost) grateful to Alex Salmond (Indy Scotland must have its own currency, April 18) for letting this huge elephant out of the room. Many of us in the Scottish Currency Group have been raising for some time that it is absolutely essential to prepare for this very thing.

Unless I have missed it, there is nothing appearing anywhere from all political parties in the campaign despite the SNP passing a motion at conference in 2019 submitted by Dr Tim Rideout that “Scotland would move to establish its own currency” shortly achieving independence.

There are many people much more qualified than I to describe MMT (Modern Monetary Theory), in particular Professor Stephanie Kelton, but what should jump out of The Sunday Times is this quote by Irwin Steiner, referring to President Biden’s actions in response to the pandemic: “It’s not easy to follow the trillions trail ... six relief bills have pumped $5.3 trillion [£3.3 trillion] in newly created fiat money into the economy, equal to about 25% of GDP.”

This undoubtedly confirms that creating digital money is alive and well in the United States, which as a currency issuer can never go bust. Similarly, the Bank of England as a currency issuer will NEVER go bust – so please, Mr Chancellor, do not deny that this is how the cost of Covid and any other related expenditure is being covered.

In the exactly the same way, an independent Scotland will become a currency issuer very quickly after independence to properly fund the expenditure necessary to create new policies in a new country, which will care for its people. I cannot wait.

Alex Thomson
Coldstream

SOOO, the SNP manifesto comes out and this is the big Alex Salmond Party (aka Alba) response.

As I remember it, the SNP position is to move to a Scottish currency when it is economically favourable to do so. Which makes sense to do until all the current UK public pensions, benefits and other key financial issues currently operating in Sterling are sorted, such as the small matter of Scotland’s trillion-pound (Sterling) financial and banking sector.

The markets are all ready expecting an oil and gas-backed Scottish currency to rise rapidly in value over Sterling on floatation. Just another wee problem if Scotland goes straight for its own currency without first sorting the current dependency on Sterling.

That leaves this as just another bit of megaphone, populist politics from Mr Salmond.

Peter Thomson
via thenational.scot