TIP 029 : What is the Federal Reserve doing? (Investing Podcast)
We Study Billionaires - The Investor’s Podcast Network
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The Money Multiply
From 19 forties up to 19 81, you saw this economic inflation occur. The money multiplier in 19 forty was a four. That means for every dollar they could lend out for four dollars. In the early 19 eighties, when inflation was at its highest, that money multiplie was huge. And so what's really interesting is when that money multiply is high, the credit's high, everyone thinks there's real dollars in the system, even though there's not. Think of it as being a rope and pulling back on one side causes the other side to go down. It just works in tandem with today’s global financial crisis. But we're talking about the 19 forties
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