HAVE you heard about the latest Quantitative Easing initiative from a Scottish council?

They have rung up a credit card company and told them to give every council taxpayer in their area a £1,000 increase in their credit limit guaranteed by the council.

What a wheeze! Everybody is happy – the credit card provider loves it, the citizens love it, the pubs and shops love it and, best of all it has not actually cost any money at all.

No wonder the finance director of the council wanted, as a matter of courtesy, to tell the councillors about the scheme first.

A letter was sent to the Scottish Government afterwards but no need to consult them before launching such a fabulous scheme which the council think everybody else will want to copy.

Sadly, or luckily depending on your point of view, there is no such scheme by a Scottish council.

No such holding back for the Scottish Government though.

A £500 million scheme launched to ensure finance is made available to companies, with the providers of the money having it guaranteed by the Scottish Government - well actually guaranteed by you the taxpayer - it is your money really.

Derek Mackay appeared smugly confident that the UK Government would see what a wonderful plan this was - no need to consult them obviously - even though they have to approve it.

I think Mr Mackay’s rather transparent plan is, an old SNP trick, deliberately to propose something which - if the UK Government says “No” - can be portrayed not as financial common sense but as nasty Westminster bullying our very own Holyrood heroes. One day they may grow out of it.

I think I have worked it out though - Derek Mackay has been taking advice from Fred Goodwin. How to run the economy with the benefit of innovative financial thinking.

Contrary to popular myth, Fred wasn’t a fool and nor was he trying to destroy his bank.

He thought he was doing the right thing - and so did nearly everyone else at the time - Fred was knighted, banker of the year, politicians (including our very own Alex Salmond) all over him egging him on, etc. etc.

The problem was not with Fred’s first step or even any single step but the cumulative effect of a number of steps, some not individually understood by Fred or those around him, the interconnections between the steps and the wider world not understood at all.

Then the economic framework shifted which brought Fred and his bank back to earth with such a bang that Scotland alone would have been unable to fix it and the UK has only been able to do so with considerable pain.

What the foolish Mr Mackay has done is put the nation’s assets behind finance for companies which would not otherwise be given without that state guarantee.

No actual money is needed from the Government and, hey presto, good stuff happens.

Worryingly it is clear that Mr Mackay and his colleagues think this is a clever move. In fact there is not a shortage of money available for sound projects and companies now.

The real trouble is though that contingent liabilities have a horrible habit of turning into actual liabilities just when you least expect it and can least afford it. Ask Fred.

This scheme is a step by the ignorant down a dangerous road.

Pinstripe is a senior member of Scotland's financial services community.