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by Droobfest
2740 days ago
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When a company pays back interest to a bank, the interest isn't magically removed from the money supply. So the bank also has $10k more profits, with which it pays its employees more, who can then buy more widgets from the company etc. Yes, whether this is sustainable does depend on increased economic activity. Which is why it's so important to lend for (sustainable) productivity growth or you get a bubble which creates liquidity problems when it pops. |
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