From Mr Andrew Ellis
Sir, - Derek Bevan (
Letters, 6 September) is quite correct, in that in ordinary
businesses all transactions have a matching credit and debit entry;
but banks are not ordinary businesses.
They have the ability to create "money out of nothing", as was
pointed out by Andrew Dickie (Letters,
30 August), where every deposit can be used as a basis for
lending up to the bank's liquidity ratio. This dictum dates from
the early 19th century, when banking activities were relatively
simple. There has been no real attempt to curtail the banking
system, whether by the Bank of England or successive
governments.
Indeed, given the complexities of modern banking, it is now
impossible, and "light-touch" regulations of fringe financial
activities have not helped. Far from improving the situation,
quantitive easing will, in the long term, only aggravate the
position when these vast sums of money ultimately find their way
into circulation.
In my view, the sacrifices made by most of us since 2008 are
merely papering over the cracks - and there is much worse to
come.
ANDREW ELLIS
60 London Road
Cheltenham GL52 6EQ