How do banks work?

Nathan Lewis runs a blog called New World Economics, and back in 2008 he wrote a series of 7 articles which do a very good job of explaining how a bank works.

It is well worth a read.

Click here to see the series.

Note that it was written in early 2008, which was about the time when the FED started aggressively cutting their target rate, and strains had already begun to show in the banking sector.

During the boom years, the FED rate had increased steadily from its low of 1% in mid 2004 up to reach 5.25% by early 2006 where it remained until September 2007. Then the FED began a rapid sequence of cuts which had brought the rate down to 3% by Jan 2008, ending the year at 0.25% where it has remained until today.

Just so you know, like.


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