sapper's blog

Oct 04 07:24

Will no savings doom Americans?

According to my limited understanding of economics, banks are subject to the law of supply and demand. So, if they want to get more money into their reserves, an increase in interest rates is required so more people will bank their money in exchange for a higher rate of return. Banks can lend more (though at a higher rate) because they have more money in reserves to lend.

However, what I'm seeing is that the banks want to please all the people all the time. This flies in the face of conventional wisdom. There are some fundamental laws of economics being violated here.

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