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The Importance of Bank Reserves in the Economy
Bank reserves are the money we have on hand to pay back our depositors it's not in the form of cash but it can be turned to cash instantly if we suddenly get a lot of it. If we kind of sit on it not a lot happens in the real economy and that is exactly what was happening with that money from 2009 to 2019. The only thing that's different is that the banks are now expanding the balance sheets and quite aggressively and that creates a different form of money. People who borrow money from banks tend to use it in thereal economy they can of course just use it in to buy assets but on a whole it tends to get used in the realEconomy