We now know, with certainty, that National Westminster was solvent in 1974. Will we be able at some point to say the same thing about RBS and Lloyds in late 2008? The short answer is that we will know if and when the state makes a profit on its transactions with the banks. If the state does make a profit and the banks are capitalized at least as well as before the crisis, then the banks will have repaid from positive cash flows any loans or capital injections they have received from the state. As there are already many signs that the state will in fact make a profit from its involvement in UK banking, their problem in late 2008 must have been one of illiquidity. 

On this topic, which is basic to the argument of Beyond the Crash, Brown was wrong. But, even if his interpretation of the crisis had been correct, his handling of it turned out to be catastrophic. Brown has always fancied himself as a path-breaking political figure who directs history onto a new course. As Chancellor of the Exchequer he therefore eliminated officials, even very senior officials with huge experience, who said that in a particular policy area change was unnecessary. In 1998 he connived at the removal of Terry Burns, the Permanent Secretary he had inherited from the Conservatives, partly on the grounds that Burns had monetarist leanings. 

Brown would define the world anew and run the economy without regard to the quantity of money. But managing an economy without reference to money is like steering a ship without radar. In their famous book A Monetary History of the United States, 1867 -1960, Milton Friedman and Anna Schwartz showed that the Great Depression of the early 1930s was caused by a collapse in the quantity of money. By "the quantity of money" they meant the sum of all money-type assets, including notes, coin and bank deposits. Of these, bank deposits were much the most important. In other words, Friedman and Schwartz demonstrated that the Great Depression was caused by a collapse in bank deposits. 

In the traumatic conditions of late 2008, when all sorts of scare stories about another Great Depression were going the rounds, it should therefore have been a priority to ensure continuing growth in the quantity of money. The trouble was that, because of the consensus narrative and conventional wisdom that had then already been articulated, policy-makers took wholly misguided decisions. These decisions were certain to reduce bank deposits and so to destroy money. 

For Brown, the first item on the agenda in October 2008 was to force the banks to raise large amounts of capital in a short period of time. In the prologue to Beyond the Crash he glorifies the moment when he underlined twice "Recapitalize NOW." ("I wrote it on a piece of paper, in the thick black felt-tip pens I've used since a childhood sporting accident affected my eyesight. I underlined it twice.") But could Brown not see that the initial effect of bank capital-raising might be to make the recession worse?