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by JumpCrisscross
1254 days ago
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> bank "loan" is not a legally a loan at all but a new security that is created and purchased by the bank No. Bank loans are legally loans in all competent jurisdictions and definitely not securities. (One can securitise loans, e.g. leveraged loans, but that's separate from lending.) > a very important level of understanding, and one that is obfuscated by the central banks What? Central banks somewhat consolidate credit creation. Credit has always been the basis of money, even in the commodity era. |
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Well, the obligation to pay back the loan itself may not be a security, but the receivership of the money that is paid back is usually packaged into a security, so that the entity that give out the loan may not be the one that is eventually paid back for it. Banks package and sell the rights to get the money back.