3 ms·
Yes, you've increased the amount of money available to people to borrow (M2) by $100. it affects inflation, if not as much as M0 does iirc. (its been a while s
by nightpool 11y ago
Yes, you've increased the amount of money available to people to borrow (M2) by $100.
it affects inflation, if not as much as M0 does iirc. (its been a while since I've taken econ, so i'm a little fuzzy on that)
- frankchn 11y agoYes, it would expand M2 money supply and affect inflation, but I don't think the scenario I painted was what Kinnard had in mind when he wrote "Banks don't actually borrow the money. They create it." To 'create money' under my scenario, you have to borrow it from someone else first.