Dissent within the party was punished, and loyalty in Parliament became increasingly important. Parliament increasingly became a charade with little supervisory power over the executive. Even Cabinet government under Thatcher declined; substantive issues were decided by Thatcher in consultation with a few key ministers and advisers. It seems that Thatcher’s brand of ‘strong leadership’ is now crucial to success in British politics.

A TEN SHILLING BANKNOTE

Ten-shilling banknotes were the pre-decimal equivalent of the fifty pence (50p) coin and to continue with his collection post-decimalization, Finn accumulated the banknotes when they were no longer legal tender.

Finn’s investment risk assumed that his autographed 10/- banknotes increased in value, compensating for their reduction in value as legal tender due to inflation and – technically – their defacement [1].

Finn had a banknote signed by John F Kennedy (JFK) at the time of his presidency. If, pre-decimalization, this JFK autographed banknote was used to buy some groceries (assuming that the grocer had no interest in the JFK signature defacing the note), it would only buy ten shillings worth of groceries in that store. Alternatively he could have taken it to a collector of autographs and had he been offered more than its face value of 10/-. If this valuation also included any costs Finn put on his obtaining the autograph, Finn would make a profit. A collector of banknotes (assuming no interest in the JFK signature) would not be interested at all, as (most) such notes were in circulation as legal tender and this one had been defaced.

Today if Finn’s JFK 10/- banknote were fed it into the self-checkout machine at a supermarket, it would be rejected as it’s no longer legal tender and has no ‘exchange value as such’. Plus: post decimalisation, fiat money inflation means that £5.50 must now be spent (RPI) to make the equivalent pre decimal 50 pence (10/-) purchases.

A present day valuation by a collector of autographs could be at least 10 times more than that from a collector of banknotes. This is because the market value of a JFK autograph (now £1000+) in the specialist collector’s market of autographs has increased in value faster than that of the 10/- banknote (now £100+) in the specialist collector’s market of banknotes.

Finn was astute in converting fiat money  into an ‘effective’ commodity,  making his collection of autographs an asset.  While it may be more correct to call Finn’s autographed banknotes a ‘collectible‘, their value was that of a commodity that could be bought and sold in a a particular commodity market. A  commodity, which, if bartered for fiat money, would generally be found to increase in value against such inflationary money. Finn was securing the value of his fiat money against its inevitable inflation and in the process creating a wealth that he personally stored.

[1] Under the Currency and Banknotes Act 1928, it is an offence to deface a banknote by printing, stamping or writing on it.

Why is a jury?  (Before Mr. Justice Mole)

 This complicated action has now lasted thirteen days. Sir Ethelred Rutt, K.C., whose health has recently been causing general concern, made a startling attack upon the jury in his closing speech for the plaintiff to-day. He said: May it please your Lordship, members of the jury, me learned friend has just completed an eloquent speech which continued for two days, and was at least one day too long. I must confess it wearied me –        

Sir Humphrey Codd, K.C. (jumping up): Milord———–

The Judge: Be seated, Sir Humphrey. Sir Ethelred no doubt refers to the theme and not to the manner of your remarks.

Sir Ethelred: No, milord, I referred to the whole thing. But the passages which pained me most, members of the jury, were the sickly compliments he paid to you. At fairly regular intervals in his dreary recitations from documents and Law Reports he would break off to tell you that you were intelligent men and women and therefore you would think this; that you were men of the world and so would have noticed that; that you were reasonable, attentive, honourable, and God knows what, and so would certainly conclude the other. Perhaps he thought the only way in which he could hope to keep you awake was to throw bouquets at your heads.   What a pie-face!

 Sir Humphrey: Really, milord, I do protest——-

The Judge: Calm yourself, Sir Humphrey.   Counsel’s language is not perhaps ‘Parliamentary’, but it is not unusual in a court of law.   I think that you yourself described his client as a blackmailer and forger.

Sir Humphrey Codd became seated, muttering.

Sir Ethelred (continuing}: Now, ladies and gentlemen, I do not propose to slobber insincerities at you, though I too in my time have had occasion to wheedle a jury and drag out the Vox Humana stop in a closing speech. Of all the overrated contraptions in the British Con­stitution I rank highest – I mean lowest – the jury system.   It may have been useful in the old days – and – may be useful again  – to protect the subject against a tyrannical Executive¹; and any one who apprehends that he may receive injustice from a judge of the High Court sitting alone – a fantastic conception, milord – should be able to call for a jury to hear his cause. On some broad simple issues too – in libel actions, for example – a jury may help to keep the Courts in touch with modern opinion, though even there, as often as not, the verdict of twelve good men and true is false and wicked, staggering and crazy. But in a case —-

The Judge: Sir Ethelred, will there be any charge for your lecture on the jury system?

 Sir Ethelred: No, milord. Milord, I was just coming to the present case. Look at it! It’s lasted a fortnight. The most complicated dispute in my experience. The documents were a mile high when we began; and they now measure three, for the reports of the proceedings in this Court amount to two (to which the speeches of me learned friend, milord, have contributed about half a mile) –

Sir Humphrey: Milord    

Sir Ethelred: All about debentures and mergers and mortgages and subsidiary companies—twenty-five sub­sidiary companies on one side alone! Not to mention the expert evidence about the scientific stuff—all that fandango about the magnesium alkaloid and the patent vapour-feed. The chemists on the two sides flatly contradicted each other, and so did the accountants. I don’t believe there’s an accountant on either side who really knows what some of the figures mean; I don’t believe there’s a single person in this Court  –

The Judge: There is one person in this Court, Sir Ethelred, who has a firm grasp of the whole case.

Sir Ethelred: 1 beg your Lordship’s pardon. Certainly, milord. But, milord, with great respect, that rather bears out—ah—what I was saying—ah—for that one person, milord, as this is a jury case, will not have to answer the important questions in the case. You, milord, have had the advantage at every stage of this protracted bicker of seeing the shorthand reports of the previous day’s proceedings, with copies of the material documents, diagrams, maps, schedules, balance-sheets, accounts, and so forth. So, milord, have me learned friend and myself, each of whom is attended by a small cloud of solicitors and junior counsel. We are all three possessed of exceptional intelligence and are equipped by long training and practice for the rapid understanding of complex figures and affairs; and if at any moment we are in doubt we can request each other or our advisers for information and assistance. Yet you will recall, milord, how often we have found ourselves—sometimes all three of us—in an incontestable fog about some vital point, exactly what a witness said or a correspondent wrote, the date of an interview, the amount of a cheque or bribe, the wording of a formula, the position of a building; and how many minutes we have spent each day upon excavating the forgotten facts from the desert of documents with which we are surrounded. And how, milord, can we expect these twelve poor mutts on the jury–

 The Judge: What is a mutt?

Sir Ethelred: Milord, a mutt

The Judge: Sir Ethelred, no doubt you know best the lines of advocacy most likely to advance the interests of your clients; but is it quite wise to describe the jury as ‘mutts’, which, though I am not familiar with it, I judge instinctively to be a term of depreciation?

 Sir Ethelred: Milord, ‘mutt’ is a relative term. The Prime Minister, if he were requested to transpose a musical composition in A flat major into the key of E minor would readily confess himself a mutt in relation to that particular task.

The Judge: Very well, Sir Ethelred.   Proceed.

Sir Ethelred (turning to the jury): How, I say, can you poor mutts be expected to get a grip of this colossal conundrum without the assistance of any documents at all? No shorthand notes, no maps, no accounts, except now and then when his Lordship decides it is time you were given a bone to play with, and we let you have a hasty glance at a diagram that doesn’t matter. The whole thing’s fantastic! There you sit on your hard seats, with scarcely room to wriggle, wondering what it is all about. Decent fellows, I dare say, some of you, but with no particular intelligence or financial training, and wildly divergent in character and opinion. And presently his Lordship will ask you to answer—and answer unanimously—about seventeen extremely unanswerable questions: ‘Did the defendant knowingly make a false assertion?’ and so forth. How the deuce do you know? You don’t even know when you’ve made a false assertion yourselves. And unanimously I look at you, twelve good men and true—or rather, ten good men and true and two women¹—and I try to think of any simple subject about which the twelve of you would be likely to agree unanimously if you were assembled together by chance in any place outside this Court; at a dinner-party, on a committee. The simplest questions of fact, morals, ethics, history, arithmetic—and you’d be all over the shop.² And yet when we shut you up in a cold room with nothing to eat you can arrive at unanimous decisions about questions that baffle the wisest brains of the Bench and Bar. I find that highly suspicious. I don’t believe

The Judge: Do the jury wish Sir Ethelred to con­tinue?

The Foreman of the Jury: Yes, milord; we find the gentleman refreshing.

The Judge: Then perhaps Sir Ethelred will make a gradual approach towards the case which is before us?

 Sir Ethelred: No, milord, that is just the point. Members of the jury, for the reasons adumbrated I consider it quite idle to discuss this difficult case with you at all. Though I spoke with the tongues of men and of angels and for as long as me learned friend, it would still be a complete gamble which side you came down on. For all I know, the gentleman with the strongest personality in that box may particularly dis­like me or have a warm admiration for Sir Humphrey Codd. One of us two is right in this case and represents truth and honesty; the other does not; and all I propose to tell you is that I am the one who is right. But I will fortify that bald assertion with the reminder that I have at least, to your knowledge, told the truth about me learned friend, about the jury system, and about yourselves. Which is more than Sir Humphrey can say. And I ask you to argue that if I am demonstrably truthful and right about so much I am probably truth­ful and right about the rest. Good afternoon.

The Foreman: We find for the plaintiff.

The Judge: But I haven’t summed up! This will take three days.

The Foreman: Milord, it is not necessary. We are all sure Sir Ethelred is right. Milord, it is the wish of the jury to give three hearty cheers for Sir Ethelred Rutt!

The Judge: Oh, very well. Judgment for the plaintiff. This jury must not serve again.

Note—The learned counsel seems to have left out of account the point of view of the jurors. In a recent case (Cole v. The Chisuiick Sewage Farm) it was found on the third day of the hearing that one of the jury was stone-deaf and had not understood a word of the proceedings. When asked why he had not revealed the fact before, he said that he had enjoyed watching the lawyers and thought he was doing no harm. ‘I am sorry to go, because I liked the job,’ remarked the juryman as he left the box. ‘I have not heard a word, but I liked being here. I am sorry I forgot to say I was deaf.’ To serve on a jury is to be free from the telephone, the tax-collector, from noise and other troubles for a much longer period than most citizens ever enjoy in ordinary life. See the Memoirs of a Dramatist (Ballock & Co.), where Mr. Athol Fitch records that he wrote two plays during the judge’s summing-up in British Fuel OH, Lid. v. The University of London (1926).

1 Not, perhaps, a necessary or chivalrous distinction.

 2 See Haddock v. Mansfield, where a jury found that it was not de­famatory to say that a modern novel was ‘objectionable, filthy, and immoral’, though they did not think that this was a reasonable descrip­tion of the book in question. And see Wedderburn on Women Jurors.

A. P. Herbert

“me learned friend”

Advocates and judges must – de facto – by their learned counsel, lead a jury of reasonable men in their duty to deliver justice wisely. Indeed, it is on a jury that the reasonable man can be considered a prince, served by the maxim - sapientes principes sapientum congressu.

Using the pretext of inadequate jurors, as a justification to attack a constitutional right, dating back to Magna Carta, would most surely have been vehemently opposed by Sir Ethelred Rutt K. C..

The dismissal of the jury by Mr Justice Sweeney reminded me of Sir Ethelred’s advocacy to the jury in, perhaps, his most complicated action. *

This complicated action had lasted thirteen days when Sir Ethelred, in his closing speech for the plaintiff, said: “May it please your Lordship, members of the jury, ‘me learned friend’ has just completed an eloquent speech which continued for two days. But the passages which pained me most, members of the jury, were the sickly compliments he paid to you.

At fairly regular intervals in his dreary recitations from documents and Law Reports he would break off to tell you that you were intelligent men and women and therefore you would think this; that you were men of the world and so would have noticed that; that you were reasonable, attentive, honourable, and God knows what, and so would certainly conclude the other. Perhaps he thought the only way in which he could hope to keep you awake was to throw bouquets at your heads”.

Now, ladies and gentlemen, I do not propose to slobber insincerities at you; in a case, the most complicated dispute in my experience, how can you poor mutts be expected to get a grip of this colossal conundrum without the assistance of any documents at all? No shorthand notes, no maps, no accounts, except now and then when his Lordship decides it is time you were given a bone to play with, and we let you have a hasty glance at a diagram that doesn’t matter. The whole thing’s fantastic! There you sit on your hard seats, with scarcely room to wriggle, wondering what it is all about.

Decent fellows, I dare say, some of you, but with no particular intelligence or financial training, and wildly divergent in character and opinion. I look at you, twelve good men and true—or rather, ten good men and true and two women—and I try to think of any simple subject about which the twelve of you would be likely to agree unanimously if you were assembled together by chance in any place outside this Court; at a dinner-party, on a committee.

The simplest questions of fact, morals, ethics, history, arithmetic—and you’d be all over the shop. And yet when we shut you up in a cold room with nothing to eat you can arrive at unanimous decisions about questions that baffle the wisest brains of the Bench and Bar. I find that highly suspicious.

Members of the jury, for the reasons adumbrated I consider it quite idle to discuss this difficult case with you at all. Though I spoke with the tongues of men and of angels and for as long as ‘me learned friend’, it would still be a complete gamble which side you came down on.

One of us two is right in this case and represents truth and honesty; the other does not; and all I propose to tell you is that I am the one who is right. But I will fortify that bald assertion with the reminder that I have at least, to your knowledge, told the truth about ‘me learned friend’, about the jury system, and about yourselves. And I ask you to argue that if I am demonstrably truthful and right about so much I am probably truth­ful and right about the rest”.

sapientes principes sapientum congressu

Foreman: “We find for the plaintiff”.
 The Judge: “But I haven’t summed up! This will take three days”.
 The Foreman: “Milord, it is not necessary. We are all sure Sir Ethelred is right. Milord, it is the wish of the jury to give three hearty cheers for Sir Ethelred Rutt”!
The Judge: “Oh, very well. Judgement for the plaintiff. This jury must not serve again”.

* BRITISH PHOSPHATES AND BEEF-EX­TRACT, LTD. v. THE UNITED ALKALI AND GUANO SIMPLEX ASSOCIATION.

Focusing on private sector debt (credit), the article referenced a National Bureau of Economic Research (NBER) working paper, The Great Leveraging, which analysed 138 years of economic history in 14 advanced economies.

The NEBR paper concluded that high levels of private sector debt is a more accurate predictor of severe recessions.

A study of these advanced economies established a link between the growth of private sector debt (credit) and the likelihood of a financial crisis. This link between a financial crisis and credit being stronger than that between a financial crisis and growth (either in the broad money supply, the current account deficit, or an increase in public sector debt).

Over the 138-year time-frame, crises preceded by the development of excess credit, as in Ireland and Spain (and the UK*) today, are more common than crises underpinned by excessive government borrowing, like in Greece.
[Peter*]

Excess private sector debt (credit) being the main driver of deep recessions and depressions, brings little comfort to the taxpayers who, having always paid for public sector debt, now find themselves bailing out the private sector debt (credit) creators.

Having continued to bail out the sources of private sector debt (credit), the UK Government’s Budget Reports effectively combined private sector debt and public sector debt in the 2012 report.

Prime (Policy Research In Macro-Economics) exposes the government’s reworking of the ‘crisis narrative’.

The 2010 Report stated that: “Over the past decade, economic growth in the UK has been driven by the accumulation of unsustainable levels of private sector debt and rising public  sector debt. While rising debt was an international phenomenon, it was more pronounced in the UK than in most other countries. It has been estimated that the UK has become the most indebted country in the world.”

The 2011 Report reiterated that: “Over the pre-crisis decade, developments in the UK economy were driven by unsustainable levels of private sector debt and rising public sector debt. By 2007, the UK financial system had become the most highly leveraged of any major economy. 

The 2012 Budget Report puts public sector debt first, with the only reference to ‘unsustainability’ being to levels of public spending. It  stated that:  “The financial crisis of 2008 and 2009 exposed an unstable and unbalanced model of economic growth in the UK based on ever-increasing levels of public sector and private sector debt. As a result of that crisis, and unsustainable levels of public spending, the Government inherited the largest deficit since the Second World War and the UK economy experienced the biggest recession of any major economy apart from Japan.”

The implication being that private sector indebtedness was really of minor importance, compared to public sector debt. The reality being that the reverse is true.

[For those with an urge to know the difference between a macro and a micro economist. Peter]

The case of Rex v Jackson took place before, and in the same decade (1930s), as Erwin Schrödinger devised his thought experiment. The case could be considered very similar to Schrödinger’s cat, with an analogous Kafkaesque quality. It could even be inferred, perhaps, that Sir Ethelred Rutt K. C. (representing Oliver Jackson the accused) had more than a passing interest in quantum physics. Especially as in his summing up for the jury, Mr Justice Mole ‘confessed to a con­dition of faint cerebral nebulosity‘. The condition that afflicts most – including quantum physicists – when reflecting on Schrödinger’s cat.

Briefly: Oliver Jackson and a young woman, Emily Jones, 20, took poison together, as a result of which Jones died; but Jackson, after a long illness, survived. Jackson admitted that he helped administer the poison to Emily Jones’ before taking some himself. Having survived, he was then charged with murder and attempted suicide. Sir Ethelred asked the jury to acquit Jackson on both charges on the ground that he is, or was, of unsound mind and not responsible for his actions.

In putting his case to the jury, Sir Ethelred said: “At the inquest on Emily Jones, the coroner’s jury brought in a verdict that she took her own life while of unsound mind. At that date the prisoner was grievously ill in a prison hospital and was not expected to live. If he had died at the same time as Jones there is no doubt that the same coroner’s court would have found that he had committed suicide while of unsound mind. However, he was carefully nursed back to life at the State’s expense and by the servants of the State, and he is now charged by the State with a crime the penalty of which is death. Now, the State cannot have it both ways”.

Sir Ethelred continued: “The State assumes that a citizen who takes his own life was out of his mind when he did so. It is beyond all reason to say that he who does a thing successfully is of unsound mind, but that he who fails to do the same thing is of sound mind. The sounder the mind the more likely it is to direct the actions of the body with efficiency. Therefore, if a successful suicide be mad, a would-be suicide who fails must be raving.

You may consider that Jones and Jackson are one person, for they were united in misfortune, love, and political opinions, in mind, body, and soul. A  jury has found that one half of this person was of unsound mind when it took poison. You, another jury, are asked by the Crown to say that the other half of the same person was of perfectly sound mind when doing the same action at the same moment, though this half had even greater cause for desperation and loss of control.

In other words, one jury is being asked to go in flat contradiction of another. But this would mean that one of them was wrong. Therefore the decision already arrived at is correct: the prisoner was of unsound mind at the time of the tragedy”.

Reflecting on Schrödinger’s cat being both alive and dead at the same time may cause cerebral nebulosity in most, reflecting on a person being both sane and insane at the same time, certainly caused cerebral nebulosity in the judge and jury. Jackson was acquitted on both charges and in doing so his mental state was transmuted to that of a sane person.

click here

[Note: Suicide had been a criminal offence since the 13th century, inflicting penalties on the victim's family as a Felo de se. Much later victims of a suicide became regarded as Non compos mentis. Suicides and attempted suicide were decriminalised in 1961, but it is still an offence to assist someone in the act of committing suicide.]

A sequel to a death pact, the trial at the Old Bailey of Oliver Jackson, 22, was continued to-day, when Sir Ethelred Rutt K.C. made an impassioned plea for acquittal to the jury. Jackson and a young woman, Emily Jones, 20, took poison together, as a result of which Jones died; but Jackson, after a long illness, survived. This young man (said Sir Ethelred) stands before you charged with murder and attempted suicide. He looks a normal and healthy young man; he gave his evidence clearly and well; he appears to be responsible for his actions. He has admitted that he helped to administer to the dead woman the poison by which she died, and afterwards took some himself. Yet I ask you to acquit him on both charges on the ground that he is, or was, of unsound mind and not responsible for his actions.

 The Judge: This is not a very promising line of defence, Sir Ethelred.

 Sir Ethelred: You wait, milord. Members of the jury, at the inquest on Emily Jones, the coroner’s jury brought in a verdict that she took her own life while of unsound mind. At that date the prisoner was grievously ill in a prison hospital and was not expected to live. If he had died at the same time as Jones there is no doubt that the same coroner’s court would have found that he had committed suicide while of unsound mind.

The Judge: Why?

Sir Ethelred: Milord, I shall come to that presently. But, gentlemen, he was carefully nursed back to life at the State’s expense and by the servants of the State, and he is now charged by the State with a crime the penalty of which is death. Now, the State cannot have it both ways.

 The Judge: It generally does.

 Sir Ethelred: I cannot compete with your Lordship in worldly wisdom. It is the genial habit of the State, for one reason or another, to assume that a citizen who takes his own life was out of his mind when he did so. This is partly due to the antiquated provisions con­cerning the burial of suicides, and in part is a form of conceit in the State, which likes to think that it so well disposes the lives of the citizens that any one who wishes to leave it must be mad. But, whatever the reason, it is beyond all reason to say that he who does a thing successfully is of unsound mind, but that he who fails to do the same thing is of sound mind. For this———

 The Judge: Steady, Sir Ethelred!   What was that?

 Sir Ethelred: Milord, the sounder the mind the more likely it is to direct the actions of the body with efficiency. Therefore, if a successful suicide be in­ variably mad, a would-be suicide who fails must be raving

The Judge: Does the jury follow that?

 The Foreman: We are not quite clear.

 Sir Ethelred: That will come. Now, what was the particular evidence at this inquiry which led the jury to the conclusion that this unfortunate young woman, Emily Jones, was of unsound mind? It was evidence applicable not to the woman only but to the prisoner Jackson as well, and applicable in precisely equal pro­portions. For it was, as you have heard, a letter found near the scene of the tragedy and signed by both parties. An extraordinary letter: criticizing the Govern­ment; questioning the capacity of statesmen and bankers; decrying the Gold Standard, Herr Hitler, ex-President Hoover, the Trade Unions, the Means Test, the Licensing Laws, the very House of Lords; suggesting changes in the laws and customs of the country which could only proceed from a disordered mind; attributing the joint misfortunes of the writers to persons and institutions which any British jury is bound to respect; and condemning with especial vigour the mother of Jones and the father of the prisoner. Now, the coroner, Dr. Busy, following the admirable custom of our excellent coroners (At this point cheers broke out in the public galleries and the judge ordered a man to be removed. This was done.)

 Sir Ethelred (continuing}: The coroner, I say, was not content to establish the cause of death, but conducted a minute inquiry into the habits, social life, and moral outlook of all the relations of the deceased woman and as many of her friends as could be identified and brought to the court; also he made a long speech about greyhound-racing. The inquest lasted three days, but was much enjoyed by nearly every one. In particular, the coroner made some strong and severe comments upon the way of life of the dead woman’s mother and the prisoner’s father, the former of whom, it appears, keeps bees in her bedroom, while the latter bets on greyhounds and listens to secular music in the Budwell Recreation Ground on Sunday afternoons. The coroner founded these adverse comments, as you have heard, upon certain observations in the letter I have mentioned; though this did not prevent him from directing the jury that that letter was written by one person of unsound mind and another who, though still alive, had probably been in the same condition at the time of writing

 The Judge: Are you not wandering a trifle, Sir Ethelred?

 Sir Ethelred: It may be so, milord. No, not exactly. The point is, milord: May it please your Lordship, gentlemen of the jury, the coroner’s investigations disclosed that the misfortunes of the prisoner Jackson were even more acute than those of the dead woman, Jones. Both were passionately, as the phrase is, ‘in love’, and, owing to their economic circumstances, were unable to marry; but in addition the prisoner has been unemployed almost continuously since the age of six­teen; and his father, as I have already mentioned, is a man of Bohemian tendencies and has been a source of disquiet to his son. That is what I meant, milord, when I said that the coroner’s court would certainly have found that the prisoner was of unsound mind if he had died, which he has not. A fortiori, milord, if the dead woman, Jones ………….

 The Judge: I see what you mean, Sir Ethelred.

 Sir Ethelred: I should like, if I may, milord, to dwell for a moment upon your Lordship’s sagacity, insight, and knowledge of the world.

 The Judge: Proceed, Sir Ethelred.   It is not necessary.

 Sir Ethelred: To proceed, milord?

The Judge: To dwell.

 Sir Ethelred: Your Lordship is as modest as he is handsome. Milord

 The Judge: Does the jury see what you mean?

 The Foreman of the Jury: Counsel means, milord, that the prisoner must be more mad than what the deceased was on account of more troubles and that.

Sir Ethelred: Exactly. Gentlemen, to all intents and purposes you may consider that Jones and Jackson are one person, for they were united in misfortune, love, and political opinions, in mind, body, and soul. A British jury has found that one half of this person was of unsound mind when it took poison. You, another British jury, are asked by the Crown to say that the other half of the same person was of perfectly sound mind when doing the same action at the same moment, though this half had even greater cause for desperation and loss of control. In other words, one British jury is being asked to go in flat contradiction of another. But this is impossible. For every British jury is the same—that is, it is the highest—with great respect to his Lordship—it is the highest and only infallible repository of wisdom and justice. Every British jury is always right¹; it follows then that upon the same subject two British juries cannot come to a different decision; for that would mean that one of them was wrong—which is out of the question. Therefore the decision already arrived at is correct: the prisoner was of unsound mind at the time of the tragedy; and you will acquit him.

 The Judge (summing up to the jury): I confess to a con­dition of faint cerebral nebulosity; but on the whole I do believe Sir Ethelred is right.

 The jury without leaving the box, acquitted the accused on both charges.

The Judge: But, Sir Ethelred, if he is of unsound mind, he ought to be sent to a place.

Sir Ethelred: No, milord. With great respect, milord, he has become sane again – the shock.

The Judge: Oh, I see. Very well, he may go.

1 But see the same counsel’s remarks upon juries in British Phosphates and Beef-Extract, Ltd. v. The United Alkali and Guano Simplex Association.

A. P. Herbert

The New Economics Foundation(nef) guide ‘Where Does Money Come From?’ offers the following as the most accurate description of what banks actually do.

“Banks create new money whenever they extend credit, buy existing assets or make payments on their own account, which mostly involves expanding their assets, and that their ability to do this is only very weakly linked to the amount of reserves they hold at the central bank.

Banks operate within an electronic clearing system that nets out multilateral payments at the end of each day, requiring them to hold only a tiny proportion of central bank money to meet their payment requirements”.

While the sheer complexity of modern banking works to shield the sector from difficult questions, a number of anomalies emerge with public intervention. A nef paper asks if the financial services of UK banks are ‘feather bedded‘ and getting hidden subsidies.

‘Too Big to Fail’ The government provided a bank with a public (tax funded) guarantee. This effective insurance against going bust gave it a commercial advantage over other financial institutions. By reducing the risk, a bank can borrow money much more cheaply than if it were ultimately underwritten by its reserves, assets and shareholders. This saves a participating bank large amounts of money. The benefit of the insurance against going bust, provided by the taxpayer, now goes to pay bonuses to senior staff for “performance‟ and dividends to institutional investors.

Banks make unearned profits, conservatively estimated at £30 billion annually from this hidden subsidy,

‘Quantitative Easing‘ To create more liquidity, a central bank creates money electronically using ‘quantitative easing‘. The money so created is fed into the economy using a trading mechanism with a bank. This risk free arrangement make a bank more money, taken as a percentage of every trade. This gives a bank significant windfalls, simply by being there.

Failure to disclose sufficient information keeps the likely amount hidden.

‘Make the customer pay’ At the same time as being required to rebuild capital, a bank is faced with the dichotomy of being under pressure to lend. A bank tries to manage this by increasing the gap between what it has to pay to borrow money, and what it charges people to borrow from it. Fraction reserve banking makes for a tidy “arbitrage” between the cost of paying bank savers and the income earned from debtors.

It’s another hidden subsidy which amounts to at least another £2.5 billion per year.

(click here)

Filed under: Economics Tagged: banking, debt, fiat money, finance, gdp, government, MyT, national debt, nef, politics, publication, Quantitative Easing, research, statistics, taxation, UK ]]> http://cybercynic.wordpress.com/2013/02/16/ranking-banking/feed/ 0 Peter George World's top 50 banks_0 http://cybercynic.wordpress.com/2013/02/13/money-creation-2/ http://cybercynic.wordpress.com/2013/02/13/money-creation-2/#comments Wed, 13 Feb 2013 11:39:42 +0000 Peter Barnett http://cybercynic.wordpress.com/?p=6736 ]]> The New Economics Foundation(nef) have published a guide to the UK monetary and banking system with the title ‘Where Does Money Come From?’. It contends that there is widespread misunderstanding of how new money is created, which may imply that the only widespread understanding of ‘money’, lies in its purchasing power. Drawing such an inference from the book seems reasonable.

There is a view of the financial world, which assumes those professionally in it, know what they are doing. That somehow national financial administrations, which in the case of the UK is the Chancellor of the Exchequer, the Government and the Bank of England, will always sort things out. Ignoring a history telling us that government policy always reduces the purchasing power of money.

Most view money as being cash, either in hand or on deposit in a bank. Available ‘credit (debt)’ may be regarded as being cash inasmuch as it can be used to make a purchase. In reality most monetary activities could be seen as being synonymous with those of a commercial bank. However, non commercial banking monetary activities by a private individual, are for the most part, limited by a commercial bank controlling access to debt. So controlled the flow of money into the economy that a private individual may inject. Nevertheless, like a commercial bank, a private individual may have one or more of the following:

• a small cash holding,
• money held on deposit,
• debt and a possible line of credit,
• liquid assets
• fixed assets
• tangible assets
• intangible assets

CASH & CREDIT (click to view)

The nef guide identifies national currency as existing in the three main forms shown below, the second two of which exist in electronic form. Only the Bank of England or the Government can create the first two forms of money. Central bank reserves do not actually circulate in the economy. Therefore out of the following sources of ‘money’ , the only supply of money circulating consists of 1. and 3, which are cash and commercial bank money.

1. Cash – banknotes and coins.
2. Central bank reserves – reserves held by commercial banks at the Bank of England.
3. Commercial bank money in the form of:

• bank deposits created when the banks lend money, crediting credit borrowers’ deposit accounts,
• bank deposits created when payments made on behalf of customers using their overdraft facilities,
• assets purchased from the private sector,
• payments made on their own account (such as salary or bonus payments).

1. Cash accounts for less than 3 per cent of the total stock of money in the economy.

3. Commercial bank money – credit and coexistent deposits – makes up the remaining 97 per cent of the money supply.

Defining money is surprisingly difficult, but may be taken to be; “anything widely accepted as payment, particularly by the government as payment of tax, is, to all intents and purpose, money”.