Econintersect: Adair Turner, former chairman of the UK FSA (Financial Services Authority), spoke last October at an INET (Institute for New Economic Thinking) workshop exploring new thinking on debt, economic stability and monetary policy in London. His presentation focused on textbook ‘mythology’ about banking functions and that much financial sector activity is not useful to the general economy, but is inefficient and parasitic, largely devoted to consumption rather than investment.
Here is a summary of the workshop provided by Positive Money:
This small, high-level workshop has brought together economic thinkers from civil society, trade unions, business, and policy in order to help think through how monetary policy can help to build a sustainable economy.
Since the financial crisis of 2007/8 central banks have entered unchartered territory. Unconventional monetary policy tools such as Quantitative Easing and Funding for Lending have blurred the line between monetary and fiscal policy.
This has opened an opportunity to question current models and conventional wisdom. For example, should central banks add financial stability to their remit?
New insight has come both from people working inside the system as well as from people working on these issues from the outside. Lord Turner has been a leading voice in this enquiry examining both theoretical and practical policy considerations.
One of the most pressing questions concerns democratic accountability. Fiscal authorities are directly democratically accountable to the public, but central banks are not. How can these important policy debates become more transparent and accountable, allowing civil society to participate in the crucial debate on how monetary policy can best serve the needs of society?
We have previously had a shorter presentation by Lord Turner as Documentary of the Week 21 April 2015, which was made in Toronto, also in the autumn of 2014: Documentary of the Week: Adair Turner on Finance and the Real Economy. The new presentation below gives an expanded historical background and more details on how credit and debt grow out of control in the current global monetary system and how public debt becomes burdened by transfer of private debt.
Here is the London presentation: