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About the 'fixed' multiplier: I'm going to paste from the paper that this, already old, thread is discussing. This come from the Bank of England and it's not pr
by RobertoG 11y ago
About the 'fixed' multiplier:
I'm going to paste from the paper that this, already old, thread is discussing. This come from the Bank of England and it's not precisely hidden in the text:
"Money creation in practice differs from some popular misconceptions — banks do not act simply
as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’
central bank money to create new loans and deposits."
I doubt I could be more clear than that.
About the 'link bait' thing: I'm not related to none of those sites so, if you are suggesting that I'm linking those because I get some kind of profit consider me offended.
- Retric 11y ago'fixed' might have been unclear. 'Limited' is probably a better description. Which is why 'in practice' is such an important part of that statement. Banks are old and they have already added that multiplier. So, the multiplier effect is real, it's just already baked into the current money supply. Of note, it's the reverse that's important. When banks stop making loans or loans default the money supply shrinks. PS: By link bait I mean the title is provocative and on tangentially related to the article. Like a title that said "future earnings irrelevant to stock price" and then saying future earnings don't alter stock price as there already baked in, its changes to future earnings projections that's important.