Sunday, January 31, 2010

Long thread at interfluidity

Steve and I go back and forth on this long thread at interfluidity. JKH makes a couple of appearances, injecting sanity into the discussion, so it's worth reading for that alone.

I think Steve understands how loans create deposits, but he does not understand how savings is how you account for real investment. I'm bad at explaining loans->deposits, and I'm even worse at explaining investment->savings.

Here is a very good explanation of how savings and investment are connected (thanks Scott!)


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