SIR – Now that we know how the banks create 97 per cent of the UK money supply out of nothing at all, the second part of the problem is that the banks (without consulting anyone else) then decide which sector of the economy will benefit from all this new money.

Not being stupid, they only lend some eight per cent to the (productive) business sector, because lending to limited liability companies means that if the company folds, the banks get nothing.

The banks much prefer to lend the remaining 92 per cent of new money to the (generally non-productive) property sector, where the loan is guaranteed on the price of the property.

Unfortunately, pumping all this ‘funny money’ into the one sector creates a property bubble or an artificially-high price which makes property owners feel better off, but this is just an illusion.

Since the 1980s, only some five per cent of UK society is measurably better off. Can you guess who they are?

So now we know why the financial collapse occurred in 2008; why small companies collapse at an unprecedented rate and why the price of property has increased by 200 per cent in ten years.

Christopher Hindle, Osterley Grove, Bradford