Will banks cause another financial crash?
Banks make their money from depositors by lending to others.
Banks lend out almost all the money they have on deposit. This means that there could be a bank panic if a lender can’t retrieve their deposits.
The banks are supposed to hold a percentage of every dollar in reserves. As a result, they sit on a large pile of money.
What happens if the government wants to stimulate the economy by telling the banks they can lend out their held deposits?
The last time the banks were able to lend out their reserves, we found ourselves in a global financial crash.
Dr. Richard Wolff joins The Thom Hartmann Program, and explains how all this works.
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