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I’m inclined to agree with Hyman Minsky, that credit creation needs to be under government control. Profit driven credit creation is pro-cyclical, accelerating booms, with the following busts deepened by debt deflation. Control of credit creation would be a macroeconomic lever vastly more effective than interest rates (which mostly do nothing until something breaks). I can already hear the libertarians screaming communism, but I’m talking macro control of volume, not micro management - government would set the total, the market would allocate, maybe with some macro prudential regulation to stop it all being wasted inflating asset prices. China has kept a fairly tight grip on credit creation, and I suspect that is the reason China’s economy is not a total shit show right now. A property bust of that scale would have thoroughly trashed a western liberal “deregulated” economy by this point.

On post office banking, the New Zealand Post Bank is a good example. Not just for setting a floor under the market, but to provide banking services in remote areas and small towns where the oligopoly of big banks have closed their branches (because they were “unviable”). The same idea would work well here in Australia, where the “big 4” have abandoned remote areas. Not sure how Canada’s banks are, but I expect people in remote areas and small towns have similar issues accessing banking services. Banking is an essential service, not just a business.

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I'll be discussing Minsky in the next article.

In Canada, I would guess that people in remote communities are complaining about being abandoned by the banks. From a realist perspective, they are going to be as about well served as they can hope for - essential services are typically found at the nearest small town with decent size. It's a question of whether they even have post offices.

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Fabulous. Looking forward to this coming together. I think Canada and Australia are similar in many ways, except when it is -38 in Montreal it will be +38 in Sydney.

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Thanks. My initial searches couldn’t come up with a reference.

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