Household balance sheets are changing as they shift from bank deposits to equities. But this has negligible impact on banks’ ability to lend. Those that argue this misconceive banks are intermediaries who rely on retail deposits to have reserves to lend. This isn’t what happens. Bank lending is ex nihilo. Period.
Household balance sheets are changing as they shift from bank deposits to equities. But this has negligible impact on banks’ ability to lend. Those that argue this misconceive banks are intermediaries who rely on retail deposits to have reserves to lend. This isn’t what happens. Bank lending is ex nihilo. Period.