In fact, especially with fractional reserve banking, giving a dollar to a bank means they create 9 dollars in loans.
True — provided the banks lend that 9 bucks. They pretty much aren't any more. Right now, they are facing asset deflation so severe they have to hold most assets they get just to anticipate further marking to market.
What's worse, laws have been changed (since 2006) that seem to anticipate this need to squat on cash. Banks now get paid interest on deposits held above their required fractional reserve requirement. And you can bet that money only goes from the banker bonuses to the pool boys and divorce lawyers.
no subject
True — provided the banks lend that 9 bucks. They pretty much aren't any more. Right now, they are facing asset deflation so severe they have to hold most assets they get just to anticipate further marking to market.
What's worse, laws have been changed (since 2006) that seem to anticipate this need to squat on cash. Banks now get paid interest on deposits held above their required fractional reserve requirement. And you can bet that money only goes from the banker bonuses to the pool boys and divorce lawyers.