Dingo the Dissident

THE BLOG OF DISQUIET : Qweir Notions, an uncommonplace-book from the Armpit of Diogenes, binge-thinker jottings since 2008 .

Wednesday 19 March 2014

Any money a bank lends

soon ends up in another bank.
So, for the banking system as a whole,
most loans are in reality deposits,
and there is no such thing as a shortage of money.

So who gains from financial austerity ?

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2 comments:

Anonymous said...

No, Anthony, things aren't so simple! The interest rates in the USA are really low and all, but in many other countries, they are significant. Banks need to work hard to make the money they need to finance their interest obligations.

And except for the USA, other countries -- even the "devloped" and "powerful" ones like Britain -- can't conjure money by printing. If they do it, their money will automatically end up being able to buy less, which is as good as having only as much money as they started with.

Wofl said...

The distinguished economist David Graeber begs to differ. Read his article here:
http://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity
in which he discusses the Bank of England's recent revelation.