Tim Bouma on Nostr: Reserve requirements are now zero. Discount rate is the rate at which the banks need ...
Reserve requirements are now zero.
Discount rate is the rate at which the banks need to borrow to ensure they can settle with other banks.
Since banks have no reserve requirement and can borrow at super low rates to ensure liquidity, they can issue transferable liabilities (loans which become spendable cash) at will. Where did all of those transferable liabilities go? Stocks and real estate.
Published at
2024-11-11 14:33:51Event JSON
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"content": "Reserve requirements are now zero.\nDiscount rate is the rate at which the banks need to borrow to ensure they can settle with other banks. \nSince banks have no reserve requirement and can borrow at super low rates to ensure liquidity, they can issue transferable liabilities (loans which become spendable cash) at will. Where did all of those transferable liabilities go? Stocks and real estate.",
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