On Mar 23, 2013, at 11:58 AM, Lew <wsm_mod at yahoo.co.uk> wrote:
> Shane Mage wrote:
>>> Doug Henwood wrote:
>
>>> Banks know they need deposits, otherwise they have nothing to lend...
>
>> Except that the deposit is *created* by the loan.
>
> If this were true then no bank would ever go bust or get into difficulty - they would simply create the necessary deposits by making loans.
No kidding. Banks make loans and create deposits but then they have to fund them (which is the way the sequence often works in the real world). If they can't fund the loan, they're fucked.
Doug