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

Ordinarily this is true. What is happening now is that financial institutions are trying to deleverage, so that will soak up a huge amount of deposits without any extra lending at all.


It's not true ordinarily either. Whether people save or spend makes no difference to bank deposits, because all money spent or saved gets deposited in a bank anyway. Spending is just the transfer of your deposits to someone else, not a net change in the number of deposits.

However, if people moved their money from current accounts to savings accounts (which you would expect if people actually wanted to save for the future) then potential lending would increase because banks lend savings cash more readily that current account cash. But people are probably not saving for the future. They are saving because they have less access to credit and/or are worried about losing their job. If anything, that encourages people to liquidate savings accounts rather than increase them, so the potential money banks can lend could be decreasing.




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

Search: