Why banks won't loan $ to small business.

[LuciferSam]

I was very serious about Shelly's post. He posted a video that explained banking and how money is created. It was amazing. If anyone can find it, this thread could be revived.

 

[futurebeachbum]

But back to the original question - aren't we technically ending up worse off because the banks are using "debt money" to buy t-bills instead of lending it?

I think you are correct. This capital is only improving the Bank's bottom line, not being used to increase activity in the economy.

 

[30ashopper]

I think you are correct. This capital is only improving the Bank's bottom line, not being used to increase activity in the economy.

Well, the fed lends free money at a zero rate to the banks, the banks then buy treasury debt at a higher rate, and we basically pay the banks to hold it. We'd be paying them or the chinese, at least some of the interest on the debt is landing in the pockets of american employees. That's better than wiring it to Beijing.