Another news item for the
Another news item for the file (from today’s Times):
Quote:
Mr Osborne will begin next week the Government’s so-called credit-easing programme under which the Treasury will underwrite £20 billion of bank borrowing to fund cheaper lending to small businesses.
If banks can create money out of thin air why would they need to borrow money to fund loans to small businesses ? I can see why, in this case, they’d like their loans to be underwritten by the government but not why they would need to borrow the money to make the loans. Answer: banks can’t create money to lend out of thin air.