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View Diary: Dollars are like leaves that grow on trees. (29 comments)

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  •  At the moment, money in the bank is just (0+ / 0-)

    sitting there. Interest rates are below the rate of inflation- there is very little demand for credit.

    In any case, there is a fundamental difference between giving someone money and lending them money. Krugman et al have been screaming about the need for more government spending since 2008. If loans could substitute there would be no problem.

    (Any economists can feel free to correct me on this.)

    •  No, you have it backwards. (1+ / 0-)
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      Interest rates are set at (ideally) a market-clearing price for lending.  The fact that interest rates are low does mean that demand for credit is low, sure, but it also represents the price at which it's being lent out.  My money is no more just sitting in the bank now than when interest rates were 8%.  

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