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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (11817)	12/13/2001 1:42:02 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 74559

CB - ...Similarly, credit doesn't expand itself, nor does it contract itself. Somebody expands it, somebody contracts it. Of course, but it would seem nearly automatic here. If the banks are allowed to create credit and increase the money supply by making fractional reserve loans, that's one of the things that they're in the business to do. If the executives are queasy about doing this, they would likely be in some other kind of business entirely. On the contraction side, it starts when the bank clients begin to become insolvent. When the repayments stop coming in, they can't be loaned out again. At the same time that less money is available to loan, the general credit worthiness of the loan seekers is collapsing, producing a pain avoidance response in the bankers. Regards, Don