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Banks hand out loans to mitigate localized shocks all the time, which is one thing that prevents them from turning into more macro shocks.
by ethanbond 5y ago
Banks hand out loans to mitigate localized shocks all the time, which is one thing that prevents them from turning into more macro shocks.
- clutchdude 5y agoExactly - for instance, if the commercial paper markets don't function, paychecks don't get issued.
- pishpash 5y agoYou make it sound as if the ability to create loans is an intrinsic property of banks, as opposed to it being a licensed monopoly granted to such institutions by the state.
- ethanbond 5y agoAnyone can give out loans. Having enough capital to give out tons of loans simultaneously, though, is yes a semi-unique feature of a bank.