The speech, which reads like an economic history text book, compares the world of finance during the inter-war period to that of today, making the following points:
- Recovery requires a big expansion in social and private house building - government guarantees could trigger a significant volume of housing investment, replicating the recovery model of the 1930s - a virtuous circle of new building lending to increased affordability and also increased private demand - led by building societies.
- The massive increase in private housebuilding - from 130,000 in 1931 to 300,000 in 1934 - contributed almost a third of all employment increases in that period. Today construction accounts for 20 per cent of the manufacturing sector, so a replication would have a massive boost for the economy.
- The destruction of the British building society movement from the 1980s was one of the great acts of economic vandalism in modern times as there is now no institutional structure in place to offer countercyclical lending - as there was in the 1930s.
"some radical solutions" encompassing "monetary policy, liquidity policy, credit easing and banking policy to ensure that financial institutions perform the role played by building societies and banks in the 1930s"
Adding, "Innovative approaches to public policy - making the most of the fact that our resolute action has given us a strong balance sheet - are the key to unlock this potential."