Cycles Against Trends (guest: Alfonso Peccatiello)
The Market Huddle
00:00
The Mechanisms of Liquidity Drain
When the government spends money in the real economy, it basically adds net worth to the private sector. People of course are talking about this as a liquidity drain. What they really mean is the amount of bank reserves in the financial system. We don't talk about that deficit spending funded by bond issuances at all.
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