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Over levered risk built on cheap money was a huge driver of inflation. They need to let those bets fail to let the money drain out of the system. But they won’t
by greatpostman 4y ago
Over levered risk built on cheap money was a huge driver of inflation. They need to let those bets fail to let the money drain out of the system. But they won’t. This would have been a deflationary event.
- junofan 4y agoThe Fed has better tools. Financial instability isn’t really a great way to solve this.
- greatpostman 4y agoThere’s no way to solve it without pain. That’s like saying you can go to the gym and get big muscles without getting sore.
- alxmng 4y agoFractional reserve is inherently financially unstable. Investing deposits while simultaneously promising to pay them on demand is inherently financially unstable. There’s over 100 years repeatedly demonstrating this. Like clockwork, this exact scenario gets repeatedly demonstrated.
- nerdponx 4y agoThe bets were allowed to fail. Bank shareholders got nothing.