5 ms·
I'm somewhat confused about B. The monetary base is indeed expanded through the issuance of debt in fractional reserve banking, but when the Fed pursues expans
by troyastorino 14y ago
I'm somewhat confused about B. The monetary base is indeed expanded through the issuance of debt in fractional reserve banking, but when the Fed pursues expansionary monetary policies to keep the interest rates low doesn't that increase the money supply without the creation of debt? Or is the effect on the money supply of the expansionary policies of centrals bank small in comparison to the effect of leverage ratios of fractional reserve banks?
- Tycho 14y agoI think one of the main methods of monetary expansionists policies is inducing the major banks to engage in 'more fractional' fractional banking.