SIR – I was asked the other day, “If banks produce money out of nothing and use it to flood the housing market, why is it that various governments have not intervened to prevent it?” There are two answers.

Firstly, the short answer is they can’t. In line with the dogma of free market economics, introduced in the 1980s (under Thatcher) the banking sector operates without any governmental interference. Furthermore, as the demand for ‘digital money’ (and consumer debt) has increased, (currently, 97 per cent of the ‘money’ in the economy is digital) the banks’ ability to create money and direct it wherever they choose has correspondingly increased their ability to influence the ‘direction’ of the UK economy.

Secondly, no politician wants to be in office when the ridiculously-inflated housing market collapses. The price of houses has therefore become a major political issue.

The ever-increasing price of property (when wages and standards of living are diving) is the device that politicians (of every stripe) use to convince voters that they are actually better off. It is a simple conjuring trick. And actually, a pretty good one, to convince millions of people that massive consumer debt and a housing bubble somehow equals prosperity!

Christopher Hindle, Osterley Grove , Bradford