[Glacia]

>No, people only invest if they see a return.

I'm talking about banks. That's literally their business. You know, to lend money.

> If the return is too low they will simply hold onto the money since interest rates can't go negative too deeply.

Who talked about interest rate? Why banks cant use THE MONEY THEY HAVE to lend/invest?

[throw0101b]

> I'm talking about banks. That's literally their business. You know, to lend money.

Their business is to make money. If the economy is in the toilet, it is usually because there is no demand, and if there is no demand businesses and individuals do not need loans to expand and operate, so no one is asking for credit, so banks have no one to lend to.

The banks don't want the/your money: while a savings account is an asset to you, the other side of the ledger is a liability for the bank. And if they are to provide x% to the saver, they have to earn >x% to break even (adding overhead), never mind make money.

Just a little while ago in Europe, there was all sorts of excess savings (especially in Germany) with no places to invest the piles of cash piling up, so you get negative interest rates on savings accounts:

* https://www.bnnbloomberg.ca/eu-says-danish-banks-probably-ca...

* https://archive.ph/U8Ds6 / https://www.wsj.com/articles/banks-in-germany-tell-customers...

> Why banks cant use THE MONEY THEY HAVE to lend/invest?

This is not how the banking system works, and has not been for decades. Tobin called the lend-savings model the "Old View" in 1963:

* https://elischolar.library.yale.edu/cowles-discussion-paper-...

Please stop using and talking about the money multiplier, as it just muddles up people's understanding about reality:

* https://www.pragcap.com/r-i-p-the-money-multiplier/

* https://research.stlouisfed.org/publications/page1-econ/2021...

The way that the bank system works is that banks first create a loan and second look for reserves:

* https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625

* https://rationalreminder.ca/podcast/132

The amount of savings that a bank holds has nothing to do with anything. There are entire countries without reserve requirements:

* https://en.wikipedia.org/wiki/Reserve_requirement#Countries_...

[xamountedknight]

An excellent description. I suggest that money is fundamentally a debt. An I.O.U. if you will. Over decades these I.O.U.'s(money) on a nation state wide basis become too numerous for the population as a whole (including government) to pay back. In ancient times the two ways to solve this inability to pay debt were for the King to wage war and steal money from another nation (tribute) or to cancel the nation's debt using a debt jubilee. In the post modern times we live in these options are not politically viable or conscionable. Therefore Governments only have options that involve the use of controlled deflation or inflation of the money supply using tools like interest rates, quantitative easing/tightening or fiscal spending/reduction. These post modern 'tools' only have a certain amount of efficacy and when that manipulating ability loses its power the masses suffer austerity. As in this present era. In ancient times this suffering would lead to political unrest therefore a new leader or King would announce a war or debt jubilee as the only solution. Ultimately issuing a new money (debt system) and cancelling the old is the only solution like a new king issuing a new currency with his image on it. The discussions above mine in my view are about how to manage the effects of the onerous national and private debts with the hope that economies will be able to suffer the effects of austerity until such time as the economy grows out of the debt. This might never happen and often doesn't. In conclusion then a peaceful solution is a debt jubilee where mortgage holders have their debts cancelled and those without debt enjoy a commensurate income boon. (*many of the above original ideas are not mine but collated and interpreted from various professorial sources)