with George Osborne, but when he announced that he wanted the UK to run budget surpluses, I had to agree that this would make my ideas much easier. If the UK reduces its national debt, the idea of getting rid of all commercial debt becomes much easier.
Even selling off Royal Bank of Scotland would help as changing the nature of banks primarily from lenders to holders of assets is easier if it does not affect the value of a government owned asset.
I am not sure that there is any economic justification for George Osborne’s stance. The UK was very badly affected by the 2008 banking crisis but the UK is a major financial centre with a significant number of international banks and what is more many banks (including those based in the UK) were involved in the sub-prime lending at the route of the crisis.
I am not sure that changing the country’s underlying financing would have made a major difference to the crisis – the banks would still have needed significant help and it was the downturn in the banks which lead the economic downturn – because our economies are based on debt and the banks stopped lending.
For most countries the route out of the crisis was for governments to lend money effectively replacing bank lending and run deficits and, despite government rhetoric, the last Conservative/Liberal government also ran deficits every year.
I don’t agree with the justification of this new economic restraint on the government but I am happy for it to go ahead.