True, and I guess private banks just sell all that toxic debt to the reserve banks.
But it's not the money which is being destroyed by defaults, it's only the debt component which is wiped clean. The credit component of the loan was already spent into the economy by the now-insolvent borrower and cannot be recovered by creditors so it's still circulating and adding to inflation.
It really sucks. What a horrible society we live in.
The current system monetizes bankruptcies. Bankruptcy is the only mechanism which allows debts to be wiped clean without simultaneously adding more debts.
But it's not the money which is being destroyed by defaults, it's only the debt component which is wiped clean. The credit component of the loan was already spent into the economy by the now-insolvent borrower and cannot be recovered by creditors so it's still circulating and adding to inflation.
It really sucks. What a horrible society we live in.
The current system monetizes bankruptcies. Bankruptcy is the only mechanism which allows debts to be wiped clean without simultaneously adding more debts.