"The problem is that credit is not a fixed amount due to the fact that it is leveraged" can't be true. How could the amount of credit ever be fixed? Whether ba

"The problem is that credit is not a fixed amount due to the fact that it is leveraged" can't be true. How could the amount of credit ever be fixed? Whether banks lend or not depends on whether they can make money lending. That'll never be a constant. Here's a pretty good post (and comments) on how FR relates to modern money: http://bilbo.economicoutlook.net/blog/?p=7299 http://bilbo.economicoutlook.net/blog/?p=7299