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> they bear no risk how does the existence of loan defaults jive with the idea that loans have no risk?
by princeb 7y ago
> they bear no risk
how does the existence of loan defaults jive with the idea that loans have no risk?
- pjkundert 7y agoBanks leverage themselves 50-to-1, and then take huge volumes loans to unqualified clients, in the (historically accurate) assumption that the tax payer will be obliged to bail them out. If the money creation aspect of banking was separated from the capital accumulation and loan-making/risk-taking aspect, things should unfold much differently. Particularly since there would be "fractional reserve" concept underpinning the money supply.