Webinar – Why is the central bank interest rate so low and why is it so high for the SME’s?
Why is the interest rate for the SME’s so high, while the central bank interest rate is so low? Our Webinar Series We started with
Bank Credit
Bank credit or bank loan is the loan from the bank. The borrower has to pay back the loan principal and loan interest as specified in the loan agreement.
Every time bank issues a loan the credit-money is created. Every time borrower is paying back the loan – the credit-money is destroyed. Freshly created credit-money increases the money supply. I.e. if one takes the loan from the bank, then the total money supply will increase all other participants in the economy.
When the total amount of base-money (central banking money) and credit-money are growing faster than the GDP, then we will get inflation. Otherwise, there will be deflation.
The central bankers’ aim is that the total money is growing faster than the inflation, they are actually targeting ca 2% inflation. Why is it so? It’s because productivity is growing year to year by 2%. Central bankers want to balance out the productivity growth in the economy by increasing the total amount of money. This results in inflation for the general populous and in the loss of wealth for the savers.
Why is the central bank interest rate so low? Why is the interest rate so high for the SME’s?
Central banks have lowered the interest rate and are running massive Quantitative Easing as a response to the coronavirus crisis. But why is the interest
Webinar – Coronavirus Economic Crash – Where is the difference to 2008 Financial Crisis?
Coronavirus economic crash – What is the difference between Coronavirus economic crash and the 2008 financial crisis? Our Webinar Series We started with the regular
What Drives the Fiat Interest Rate and How Much Should it Be?
In every monetary system, there is interest – the price to be paid for using someone else money. In this article, we will focus on
Why do we have inequality?
Meet the Big Blue Elephant in the room Today, the world is to a big extent influenced by the wealth pyramid so that 1% of
