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0 pointscs7021y ago0 comments

Financial institutions cannot force customers to borrow.

Customers must first ask to borrow. Their collective behavior determines the multiplier.

Customers = individuals and private non-financial organizations.

Since the financial crisis, their collective behavior has caused the multiplier to drop significantly in the US:

https://fredblog.stlouisfed.org/2023/07/the-monetary-multipl...

https://fred.stlouisfed.org/graph/?g=13oHw

I'm very skeptical of simple, appealing narratives.

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2 comments · 1 top-level

foxyv1y ago· 1 in thread

You are right, there is a lot more to it. It's an internet comment, not an econ textbook. However, the short answer is, the way the Fed "Prints Money" is through reserve rates, interest rates, and loans to banks. They don't need a press to do that, just a ledger.

cs702OP1y ago

Agree. Thanks! :-)

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