Tim Bouma on Nostr: Banks now have a zero reserve requirement. The only thing that controls the expansion ...
Banks now have a zero reserve requirement. The only thing that controls the expansion of money is the central bank interest rate, for the amount banks need to have on hand (overnight) to clear payments with other banks. A bank can simply lend money into existence; the lower the rate, the more people are willing to borrow to buy that house, and the price goes up. Of course, nothing is for free - all that money that floods the market is based on the future earnings of all those who borrowed to buy today. If the future becomes uncertain, suddenly, today, gets unmanageable, leading to unexpected shocks. That’s what we are waiting for now…
Published at
2024-10-28 11:12:34Event JSON
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