A nice concise explanation of the ongoing banking crisis and the reason for the downward spiral that becomes self reinforcing and about impossible to stop. The key is in this one sentence...
The economy operates on credit expansion which is why it's very rare to see bank credit contract.
Another way of saying the same thing is just substitute the word "Debt" for "Credit", because for every credit extended, somebody else has a debit on their balance sheet. The economy, all the money we use is DEBT. Somebody somewhere has to extend credit and somebody else somewhere has to take on debt in order to have any money at all flowing around in the economy. Once the banks stop handing out the loans, the economy grinds to a halt. Down goes the Titanic.
https://seekingalpha.com/article/4617317-an-update-on-the-banking-crisis
An Update On The Banking Crisis
RE
Credit Implosion
Started by RE Jul 17, 2023, 03:06 AM
Message path : / Society / The American economy / Economic Errata #26
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