Bank crashing is deflationary because a lot of dollars will disappear.
If the Fed tries to backstop the banking system, then it'd only be filling the hole on teh asset side of the balance sheet. The liability side of the balance sheet which is perceived as money remains unchanged.
We have no evidence, at least in the developed economies that a greater amount of reserves would compel banks to create more credit and cause currency to inflate. It is the demand for credit that drives credit creation not the reserves as experienced during 2008 bailouts -- there was no inflation. In fact, after 2008, the Fed had to do 3 rounds of QE to get the economy going -- If they hadn't done it, the US could have become another Japan.
BitcoinLuffy / Bitcoin Luffy
npub1eq…033gt
2023-04-08 15:48:33
in reply to nevent1q…yh5a
Author Public Key
npub1eq063z9pcyh6xa22ukh9rwqf95shaje64zszvglhavdflp7q7wysl033gtPublished at
2023-04-08 15:48:33Event JSON
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