THE timing of the announcement that the Financial Conduct Authority has dropped any inquiry into the banking system in the UK must rate as one of the most cynical of 2015 (“Osborne slated after shelving review into finance culture”, The Herald, January 1).

Such news was obviously deliberately “buried” on the eve of a public holiday with the hope that reaction to it will be completely dissipated before things get back to “normal” in the New Year.

This has clearly been done with the full connivance of the Cameron Government.

As a consequence those who brought the country to its financial knees will get away scot-free (as might have been anticipated).

One must also assume, given this year's precedence, that some of those who escaped any censure whatsoever will be duly ennobled or knighted in next year's honours list.

In the meantime the offensive against some of the most vulnerable in our community will be pursued with increasing vigour as they pay the full price of the economic whirlwind that the banks unleashed on us.

Ian Graham,

6 Lachlan Crescent, Erskine.

A DEMOCRATICALLY elected government should be answerable to nobody other than the electorate. It need not go cap in hand to any institution for money as it should control the national currency; who has a greater right to do so? We must kill the idea that there is a shortage of money.

Modern fiat currencies are simply tokens we agree to exchange for goods and services. Just try getting a bank to exchange Sterling for gold or even the most basic commodity such as bread, they won’t. Banks profit by charging interest on loans and the banking system is ultimately the only source of the interest required to repay the debt. To fund an annual budget deficit governments generally borrow from the same system creating our cumulative national debt owed to the private banking system and other investors.

The fiat system hinges on confidence, the blind acceptance by society of a notional value for currency that is set by a tiny coterie of financial institutions and speculators based on factors that will be financially advantageous to themselves irrespective of the effect it may have on sovereign nations or their electorate. That is why there are fluctuations in the exchange rates and “runs” on currencies. So the banking system creates vast wealth for itself simply by acting as a conduit for what is effectively “monopoly money” the majority of which has never appeared as “hard cash” in anybody’s pocket but exists only in cyberspace.

This poses the question of why the banking system is not under public control when sterling is the most basic of public utilities. Value is added to perceived worth of sterling by the endeavours of the UK workforce without the cooperation of which the system would collapse, yet we pay for the pleasure of using it. So why when the Bank of England is nationalised does the Government not control the money-supply directly as it did during the quantitative easing process? It has had the opportunity to nationalise RBS but hasn’t. I wonder if the Icelanders would have taken a different approach?

If the Government was actually in control and on “our side” then poverty could be rendered a theoretical concept, not be, as it is for an increasing number of citizens, a fact of life.

David J Crawford,

Flat 3/3, 131 Shuna Street, Glasgow.

ON December 16 last year, the US central bank, the Federal Reserve, raised short-term interest rates.

The move raises critical questions about the global economy for 2016, already slowing significantly since 2014. Further global slowdown is now almost certain in 2016 – with global oil prices now in the mid-$35 range and projected to go lower, with commodity prices globally still deflating, with Europe’s economy continuing barely growing.

The rate hike also means the US economy, already not doing all that well, may slow further in 2016.

The US Fed reduced short-term rates to nearly zero in 2008-09. Recent Fed studies have concluded the zero rates since 2008 have had minimal effect on the US real economy.

Central banks in Europe and Japan, flooding their economies with quantitative easing (QE) money injections since 2013, waited until the Fed’s recent rate rise and held off in recent months from further expanding their QE programmes and thus further devaluing their own currencies

That means both current, and more coming, Euro-Yen devaluations that will further intensify global currency wars already under way.

The central banks of United States, Europe and Japan enriched their corporations and financial investors by tens of trillions of dollars since 2008 with their zero rates and QE policies, while leaving the rest of the economy behind and struggling. Their policies failed miserably – for all but the rich – for the past seven years. Now they are about to fail again, with further disastrous results.

Central banks in the United States, Europe and Japan are mucking up the global economy again, by exporting their economic stagnation to emerging market economies.

It is therefore looking increasingly likely the next global financial crisis will originate in emerging markets with more corporate and sovereign debt defaults. It’s just a matter of time, and which comes first. But whichever, the crisis origins is traceable to the central banks of Europe, Japan, and United States.

Alan Hinnrichs,

2 Gillespie Terrace, Dundee.