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Pittsburg, Kansas | Most people don't know or realize that nearly all of what we consider "money" is just checking account ledger balances brought into existance by commercial banks loaning out money that they create with the stroke of a loan pen. We have very little fixed money supply. It is nearly all credit created money.
When money is cheap to borrow (low interest for one part) people borrow a lot more (faster than they are paying the principal off) and the money supply expands. More money for the existing pool of goods. Raising interest curtails that borrowing spree equals lower money supply equals fewer dollars chasing the goods.
It is our debt based monetary system. It is just the way it works. Or the way it doesn't work very well at other times. We have almost no permanent money. It is nearly all base on the debt created by loans.
Edited by John Burns 4/26/2022 12:37
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Increasing interest rate to stop inflation????
