Monetary Economics, Banking and Policy

8 “Revolution and counter-revolution in UK banks’” asset composition since 1945, and why they matter to the debate about horizontalism

Tim Congdon

DOI: 10.4324/9781003142317-9

Introduction

The post-Keynesian school has made an important contribution to macroeconomic analysis by emphasising two characteristics of money creation in a stable peacetime capitalist economy. First, most money creation is the result of banks’ extension of credit to the private sector. Secondly, neither the lending banks nor the central bank has direct and immediate control over the scale of such credit extension or the associated money expansion. The lack of control arises from the widespread availability of overdrafts, where borrowers decide on the timing and size ...