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Any bank can create money by lending fractionally reserves. The fact that governors used their regional state run banks to lend to themselves to cover for their

Any bank can create money by lending fractionally reserves. The fact that governors used their regional state run banks to lend to themselves to cover for their bad austerity policies was one of the main reasons for the 80s and 90s brazilian inflation problem. > I suggest double checking your sources and pro-privatization stance with care. I don't remember saying that I have a pro-privatization stance. I just wrote that they happened. Your sentence suggest that you are inconvenienced by that therefore you are the one has a "stance" on the matter.

jiofih 5y ago
They have a fixed reserve ratio, so they can’t “create money” unless more deposits come in. Can you point me to a source supporting that idea that lending from state banks was a main source of inflation?
- ulzeraj 5y ago
  > They have a fixed reserve ratio, so they can’t “create money” unless more deposits come in. Thats not true. https://www.forbes.com/sites/francescoppola/2017/10/31/how-bank-lending-really-creates-money-and-why-the-magic-money-tree-is-not-cost-free/ https://www.forbes.com/sites/francescoppola/2017/10/31/how-b... > Can you point me to a source supporting that idea that lending from state banks was a main source of inflation? http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0102-69092011000300012 http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0102...
  - jiofih 5y ago
    > where they extend loans as a multiple of the deposits they already hold > Commercial banks’ ability to create money is constrained by capital This “throw random links I found” argument strategy is not very good. I strongly recommend reading the stuff before posting as your “source”. That paper is exactly what I’m talking about - a revisionism attempt by a right-wing professor trying to frame what happened under a completely different light. It presents an hypothesis with little backing, but yeah, now you can point to the paper itself…

jiofih 5y ago

They have a fixed reserve ratio, so they can’t “create money” unless more deposits come in. Can you point me to a source supporting that idea that lending from state banks was a main source of inflation?

ulzeraj 5y ago
> They have a fixed reserve ratio, so they can’t “create money” unless more deposits come in. Thats not true. https://www.forbes.com/sites/francescoppola/2017/10/31/how-bank-lending-really-creates-money-and-why-the-magic-money-tree-is-not-cost-free/ https://www.forbes.com/sites/francescoppola/2017/10/31/how-b... > Can you point me to a source supporting that idea that lending from state banks was a main source of inflation? http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0102-69092011000300012 http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0102...
- jiofih 5y ago
  > where they extend loans as a multiple of the deposits they already hold > Commercial banks’ ability to create money is constrained by capital This “throw random links I found” argument strategy is not very good. I strongly recommend reading the stuff before posting as your “source”. That paper is exactly what I’m talking about - a revisionism attempt by a right-wing professor trying to frame what happened under a completely different light. It presents an hypothesis with little backing, but yeah, now you can point to the paper itself…