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It seems this is not how it really works. http://www.economonitor.com/lrwray/2013/08/15/banks-dont-lend-reserves-who-knew-mmt-thats-who/ http://www.economonito
by RobertoG 11y ago
It seems this is not how it really works.
http://www.economonitor.com/lrwray/2013/08/15/banks-dont-lend-reserves-who-knew-mmt-thats-who/ http://www.economonitor.com/lrwray/2013/08/15/banks-dont-len...
This is one of these things that made me think what else of what I believe is not true.
- XorNot 11y agoThe link you posted seems to fundamentally fail to contradict the OP. The link states "banks do not lend out their reserves" - which is true. They lend from their deposits, which is exactly what the OP was saying. If that's not it, then someone needs to explain it more clearly.
- RobertoG 11y agoBanks don't lean from deposits even in the "official" narrative. A bank that needs to lend money that doesn’t have it's going to use the interbank system in order to get "reserves" from others banks. The idea is that the causality is inverted. Banks lend and then search for reserves. If you see it this way, you realize that there is not constrains in how much money they can lend (except how expensive is to find reserves). Try this (maybe more clear than the other): http://bilbo.economicoutlook.net/blog/?p=14620 http://bilbo.economicoutlook.net/blog/?p=14620