A privatised power which subsequently imploded an enormous mess of debt on the global economy? I thought this catastrophe may not have escaped the attention of your readers…. but it seems that both you and your readers need to be reminded of it….

To avoid such inflationary bubbles I have argued consistently that credit creation has to be heavily regulated – in the public interest.

When privatised in the hands of a few, elites resort to frenzied and reckless greed and wealth accumulation- and when credit limits hit a buffer – demand that all their losses are nationalised….and that the poor endure AUSTERITY – until these nationalised losses are paid off….

Ann Pettifor

Yes, that’s what I meant. I’m being non-doctrinal and tentative, used the word “could” not “would”. It seems plausible that some economic activity that will be sustainable in the long term could result from an expansion of credit. It would be interesting to see some data.

Yes, the public sector should also feel the pain, but my second point stands.

First, if an increase in credit does help with the expansion of entrepreneurial activity, mightn’t this be worth some inflation?

Sensible, economically sustainable entrepreneurial activity? Or the next property/off balance sheet bank SIV / dot-com /whatever bubble?

Is there actually a shortage of capital to fund high quality startups/new ventures? Or is the complaint about a shortage of capital to prop up existing businesses who are overly reliant upon continually borrowing more money?

From my limited but bitter experience working for a company that can only borrow money (i.e. cannot use equity financing), being in debt to a bank is not pleasant. Things are much better now we have no debt.

Secondly, inflation brings down real wage rates in the only practical way, which is good in a recession, surely?

I foresee private sector wages coming down as you suggest, but the public sector getting inflation-matching increases.

First, if an increase in credit does help with the expansion of entrepreneurial activity, mightn’t this be worth some inflation?

Secondly, inflation brings down real wage rates in the only practical way, which is good in a recession, surely?

And she is right to point out, as Adam Smith did, how silly it is to try to pin currency to a commodity like gold.

I see your mate Richard agrees with her. There’s a surprise.