The Secret Wealth Advantage by Akhil Patel

Author:Akhil Patel
Language: eng
Format: epub
Publisher: Harriman House
Published: 2023-06-18T14:06:53+00:00

Banks propagate a real estate boom, an inevitable consequence of the diversion of their money creation power into property lending and chasing excess profits. Regulations do not adequately limit how much banks can lend before the economy becomes dangerously overleveraged and vulnerable to a crisis.

We will see that play out in due course. In the meantime, the economy recovers quickly from the short and relatively mild mid-cycle Recession because the property market and the banking system are resilient. In fact, it is their very resilience at this point that encourages lending to a greater degree in subsequent stages of the cycle.

Before we return to our cycle journey, we need to consider a second main actor in the story of money. Banks are permitted to create money under licence, which is granted to them by the state. As we shall now see, the state is the ultimate manufacturer of money in an economy.

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