Economic Myths

  1. Banks are intermediaries between savers and borrowers.
  2. “Money on the sidelines” – investors’ cash and money market balances – drives stock market rallies as idle money is “put to work.”
  3. Bank reserves are idle cash that the banks could (and should) be lending out.
  4. There is a multiplier effect that causes government spending to create economic growth  larger than the amount spent.
  5. Printing money causes inflation.
  6. High levels of public and/or private debt do not matter because we owe the money to one another, so debt is just a transfer between people.
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