4 ms·
They don't care. In the US, reserve requirements are very low. For every dollar of capital, they can lend 10x, 20x more. They literally create money out of thin
by rmbyrro 3y ago
They don't care. In the US, reserve requirements are very low. For every dollar of capital, they can lend 10x, 20x more. They literally create money out of thin air.
When a lender pays interest, even if it's below inflation rate, banks still make profit, because they didn't have to put any real assets, so the opportunity cost is zero.