Am I correct in assuming that, in contrast to what I was told in my youth that I should open an account with the Halifax Building Society (as was) to ensure that when it came to wanting a mortgage they’d look on me favourably because I already saved with them (how quaint!), that building societies now also create money out of thin air? And if so, I wonder was this a consequence of the financial bailout or had it always been going on?
Richard Murphy says:
March 7 2016 at 5:28 pm
Building Socities are not banks. They are financial intermediaries and so in fact what you were told – and what I was told long ago – was right then
But there are very few building socitities left.
The usual definition of banking, OK not a formal one but a good one, is that anyone who borrows short and lends long is a bank, anyone who does not do this is not a bank. Building societies most definitely do (and therefore also create money, or as I call it credit) and are therefore banks.