So just how did we trash trillions of dollars?

[basilio]

The GFC is still overshadowing the economies of the whole world and maybe as investors we might like to learn just how it came about and perhaps a bit more about the way banks and investment houses make out like bandits.

I came across this outstanding article in London Review of Books by John Lanchester. Long article but it sucks you in and by the end I really felt I had a grasp of economics, accounting and the ways of the banking system.....

John is great writer. Give it a go and I'd be interested in comments from other forum members

It’s Finished
John Lanchester

It’s a moment of confusion and loathing that most of us have experienced. You’re in a shop. It’s time to pay. You reach for your purse or wallet and take out your last note. Something about it doesn’t feel quite right. It’s the wrong shape or the wrong colour and the design is odd too and the note just doesn’t seem right and . . . By now you’ve realised: oh ****! It’s the dreaded Scottish banknote! Tentatively, shyly – or briskly, brazenly, according to character – you proffer the note. One of three things then happens. If you’re lucky, the tradesperson takes the note without demur. Unusual, but it does sometimes happen. If you’re less lucky, he or she takes the note with all the good grace of someone accepting delivery of a four-week-dead haddock. If you’re less lucky still, he or she will flatly refuse your money. And here’s the really annoying part: he or she would be well within his or her rights, because Scottish banknotes are not legal tender. ‘Legal tender’ is defined as any financial instrument which cannot be refused in settlement of a debt. Bank of England notes are legal tender in England and Wales, and Bank of England coins are legal tender throughout the UK, but no paper currency is. The bizarre fact of the matter is that Scottish banknotes are promissory notes, with the same legal status as cheques and debit cards.

http://www.lrb.co.uk/v31/n10/john-lanchester/its-finished