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Veteran Observer journalist misses point yet again

Writing in today’s Observer, Will Hutton talks about the need to reform the banks. It is strange how he and so many of his colleagues succeed in missing the point so precisely.

Hutton is just talking about effects. Banks create credit for
property purchase, of which most of that value is land purchase. The
loan is secured on the land. The lenders then charge interest on the
money they have created. In effect, they have captured, for the duration
of the loan, the stream of revenue known in economics as Rent of Land.
It is a vast amount, and it enables banks to pay their senior staff huge
salaries whilst nothing is actually produced.

The answer is not
to regulate the banks, it is for governments to capture the economic
rent of land and use it as the principal source of public revenue,
pensions, universal benefits etc. Existing taxes on work could then be
substantially reduced or abolished. If this reform is not implemented it does not matter how big or small the banks are.

Surely Hutton must know this? The tragedy is that over the years, he has enjoyed a lot of influence and could have used it to enlighten the public instead of perpetuating confusion.