Adair Turner: The Clearest Explanation of the Cause of Financial Crisis
Mira Tekelova, www.positivemoney.org | November 7, 2012
Adair Turner, the chairman of the UK’s Financial Services Authority, member of the BoE’s Financial Policy Committee, set out the fundamental cause of the financial crisis in his speech to the South African Reserve Bank on Friday 2nd Nov 2012:
“The financial crisis of 2007/08 occurred because we failed to constrain the private financial system’s creation of private credit and money.” …
Lord Turner further describes the negative impacts of fractional reserve banking:
“The impact of fractional reserve banks is thus to make the financial system and the overall economy inherently more vulnerable to instability … ”
“… inherently dangerous institutions.”
He then gives a clear description of what banks actually really do:
“The banking system can thus create credit and create spending power – a reality not well captured by many apparently common sense descriptions of the functions which banks perform. …”
I don’t know about the rest of his analysis (“private” vs. “public”), but I know that the issue of fractional reserve banking is central. Banks being allowed to lend out money they don’t possess (thus creating money) is fundamentally fraudulent. Moreover, we don’t know about this, because the education system doesn’t explain it and because the whole system we live in is built on scams.
Also from this site, this video argues that commercial banks create money:
Do banks create money or just credit?