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Immunised from Banking Lurgy? Ep 335 David Tripe

NZ Everyday Investor

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The Credit Creation Theory

In a large bank, there's going to be plenty of loans coming in. And if you're making a loan that is small relative to the size of the bank, it's not going to interfere with your day-to-day operations. But at the same time, somebody else is probably coming in and paying a loan off, so that's actually destroying credit. So the amount of net credit creation is generally pretty small. If a bank finds it is doing a large amount ofNet Credit Creation: Bank will have to slow process down or engage in some other interventions for growth.

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