As I wrote at that time,
[Unsubbed original:] The purpose of banks used to be to make a profit by using the deposits in their care productively at second-hand. That is why they pay interest: to bring in funds to be lent. If they don’t do either then they are no longer banks but state-sponsored rentiers.
Far from encouraging productive capital, Mr Kaletsky’s prescription would have us reverting to a pre-capitalist economy where those with savings dare not recycle them. Their personal cash will end up converted to valuables, hoarded, and hidden to keep them safe from predatory tax farmers. Printing money is also a well-tested means of encouraging the same sort of behaviour.
For a recovery we need capitalism and the market to do their work. However painful, that is better than reversion to the Dark Ages because governments and their advisors want to be seen to be doing *something*. Doing nothing may be the best alternative.
Mr Kaletsky has got what he asked for and now finds he does not want it. Human, all too human.