Most people have no real idea of how the banking system and money actually works.

They fancifully believe the Government is in charge when the reality is that when the Government needs money it has to go cap in hand to the City and borrow from commercial banks and pay them interest in the same way as the general public.

The Bank of England has no bottomless reserve of funds into which the Government can dip to balance the books. It does, as a result of quantitative easing, have a massive amount of UK Government bonds which, considering the increasing national debt, have no real value. How the Bank of England (BofE) acquired these bonds is peculiar as it never had assets to do so. That the BofE can say to a commercial bank: "Give us some Government bonds and in return we will let you adjust your balance sheet", would sound suspiciously like fraud in any other environment.

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The world financial collapse proved beyond doubt that fractional reserve banking, where non-existent capital is fed into a loan cycle which can only function if all debts are paid and nobody removes their assets, is in actuality a glorified Ponzi scheme. As in the case of Bernie Madoff, if private individuals use this mechanism they go to jail for a long time but if the system is run by and for the establishment it is given Government backing and those who operate it are feted and rewarded. The Libor scandal demonstrates they can help themselves to as much of the illegal profits as they want and remain immune from prosecution as long as the establishment gets its share.

It is testament to the apathetic nature of the UK electorate that, at a time of austerity with worse on the way, we meekly stand back while the government, by its inaction, is complicit by tolerating such openly corrupt behaviour. Despite almost daily revelations of new corrupt practices in the banking industry, the rich are still getting richer and the poor are getting poorer. The two facts are connected.

David J Crawford,

131 Shuna Street, Glasgow.