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| User Info | The Long Weekend Mind-Soak; entered at 2012-02-20 14:37:03 | |||
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Genesis Posts: 130804 Registered: 2007-06-26 
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Fractional reserve lending doesn't create the business cycle. The business cycle is created by the mathematical fact that two exponential functions always run away from one another. Since nobody will ever lend INTENTIONALLY at a loss, you therefore have two compound functions (rate of required return in GDP growth and rate of interest charged) that always have a spread. And as a consequence, contractions to clear out the weakest credits are inevitable. Attempting to violate the laws of mathematics is how you turn an ordinary and mathematically-necessary recession into a depression. 2012-02-20 14:37:03
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