Hacker Newsnew | past | comments | ask | show | jobs | submitlogin

Sure, there are limits. But fundamentally, holding all else constant, increasing bank reserves decreases the cost of lending, which increases the quantity of lending, which increases the money supply.


"increasing bank reserves decreases the cost of lending"

Only if there is a net margin between what the central bank pays on reserves and what the bank has to pay out on the matching deposits.

Once central bank renumeration gets low, the cost of unsecured deposits matches or exceeds the central bank remuneration because of the draw to cash.


Not when the interest rate is 0% From then on, any increase in reserves doesn't make borrowing more attractive.


When it is actually 0%, yes. But it is currently not 0%.




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: