5 ms·
>Bailing out depositors isn't going to increase inflation - you're just giving people the same amount of money they already have. That’s not how it works. The
by helsinki 3y ago
>Bailing out depositors isn't going to increase inflation - you're just giving people the same amount of money they already have.
That’s not how it works. The original funds do not evaporate out of thin air. They transferred to the opposite side of the trades that the banks are making, meaning customers’ funds are melting into the pockets of hedge funds, etc.
So, in effect, it is the opposite of what you’re stating. The money is not replaced; it is duplicated, thus causing inflation.
- IAmGraydon 3y agoI’m afraid you’re the one who doesn’t understand how it works. The banks are buying treasuries from the US Govt with customer deposits, which are then being devalued as bond yields rise. They are then being forced to liquidate those devalued bonds before maturity to cover withdrawals. There isn’t a hedge fund on the other side.