For those who want to shrink the banking system

Economists had pinned their hopes on improvements in the all-important services sector, which accounts for three quarters of the national output, but were let down by the embattled banking industry. Output in financial and insurance services contracted by 0.8pc to fall back to levels not seen since 2005.

No, that\’s not the only cause of the recession. But it is contributing.

Specifically attempting to shrink one rather important part of the economy while growing the entire economy is one of those things that it\’s really rather hard to do…..

1 thought on “For those who want to shrink the banking system”

  1. Well, one perspective is to remember that banking doesn’t produce an end product. It’s a service industry to business.

    So, like y0u often rightly say about jobs in general, it’s a cost not a benefit. Just as a utopian economy would produce output without any jobs, a utopian economy would need no borrowing either. The real economy does need to borrow money. But that’s not a cause for celebration, and the less you can do, the better.

    So, you shouldn’t be adding such industries into your “GDP” figure if you want your GDP figure to reflect actual growth in economic output.

    Doesn’t matter how fast you move money from one account book to another, it doesn’t create any final products. The lending of money is a useful service to business, but as with any other business cost, the less of it there is, the better for everyone else.

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