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Wednesday, December 14, 2022

Loans vs Deposits

 

She’s looking at the PV of depository system loan assets not “loans!”…  another reification error here…

You can see here from the graph the MMT thesis “loans create deposits!”  I suppose is true but it is not exclusive… 

If the Central Bank credits reserve asset balances to the depository system this will credit depository system liabilities too…. As can Treasury debiting USD balances previously credited to the TGA…




In the GFC the Fed credited USD reserve assets to the depository system so the PV of loan assets had to be reduced in order to maintain the constant proportional control ratio of total depository system regulatory capital value to total depository system asset value … thus causing the crisis which they are legally tasked to avoid…

They are complete professional failures past and present…





1 comment:

  1. And deposits are not "decreasing." They are moving to the Fed's RRP facility.

    ReplyDelete