Good point. Question for
Good point. Question for currency cranks: do rich individuals and loan sharks also create the money they lend out of thin air? Of course not. They have to have the money to lend in the first place. Banks are no different.The Times (23 November), reporting on the situation in the northern Chinese city of Ordos, clearly explained where the money for “underground lending” had come from:
Quote:
Money made from the region’s huge coal reserves or land compensation has made many residents rich, people who, instinctively, have looked for ways to invest that money as real interest rates from bank savings have slipped into negative territory. By way of loan sharks and other methods of underground financing, that money has been churned back into property investment and more building.This year the official figure for real estate development loans in Ordos was 597 million yuan (£60 million), while the true scale of property investment was closer to 40 billion yuan. More than 85 per cent of the money came from the underground lending market.