But not if - as with Northern Rock - the Central Bank is printing money which is being used to pay off existing bank loans.

The monetary effect in that case is neutral, and the "tax-payer" makes a small fortune from the "seignorage" arising from the privilege of money creation. In this case receiving 5.5% plus penalties for something that costs nothing to create.

So the truth of it is that the longer that the Northern Rock saga goes on, and the more the Bank not the "tax payer" pumps in - the better off the tax-payer will be....

Although it was interesting to see Tim Congdon letting the cat out of the bag, we are also seeing FSA's Hector Sants beginning to think the unthinkable.

These thoughts are essentially financial pornography.  No decent newspaper has for generations printed anything that exposes the reality - and redundancy - of the banking system.

"The future is already here -- it's just not very evenly distributed" William Gibson