Cycles Against Trends (guest: Alfonso Peccatiello)
The Market Huddle
00:00
Why the Banks Don't Lender Out Reserves
Banks cannot and will not use reserves to buy stocks. Bank reserves are used by banks to settle transactions in the interbank financial system. So this pipe that people like to draw between bank reserves and loans or equity prices is an imaginary pipe, it doesn't exist. And at the end of the day, if you believe that the banks lend out reserves, you'll come to some conclusions that I think will be incorrect.
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