Yes, it is a requirement that everyone’s zippers zip. If everyone were a bank as Hicks suggests then there has to be a standard limit on the amount each individual may lend without any additional borrowing.
When an individual borrows from another then he may lend more than his initial limit because he is relending the same initial stock. There is no limit to the amount of times that relending may occur. Each time the initial stock of money is relent a level of a money flow hierarchy is established. This is money flow is referred to as the gross domestic product (GDP)
The velocity of money is measured by dividing GDP by the stock of money initially lent (GDP/M2). The growth of this is the increasing of the number of discrete levels in the hierarchy. Each level being two individuals zipped zippers.
> Yes, it is a requirement that everyone's zippers zip.
Not only is it not a requirement that everyone's zippers zip, but it's also impossible for everyone’s zippers to zip all the time.
The future is uncertain. Sometimes, you just can't make a promised payment you expected to be able to make
What we want to avoid is a situation where a cascade of defaults brings down the whole system.
> If everyone were a bank as Hicks suggests then there has to be a standard limit on the amount each individual may lend without any additional borrowing.
What does “lend without any additional borrowing” mean? Banks typically expand their balance sheets on both sides when they lend. They borrow the money to fund the loan.
Yes, it is a requirement that everyone’s zippers zip. If everyone were a bank as Hicks suggests then there has to be a standard limit on the amount each individual may lend without any additional borrowing.
When an individual borrows from another then he may lend more than his initial limit because he is relending the same initial stock. There is no limit to the amount of times that relending may occur. Each time the initial stock of money is relent a level of a money flow hierarchy is established. This is money flow is referred to as the gross domestic product (GDP)
The velocity of money is measured by dividing GDP by the stock of money initially lent (GDP/M2). The growth of this is the increasing of the number of discrete levels in the hierarchy. Each level being two individuals zipped zippers.
> Yes, it is a requirement that everyone's zippers zip.
Not only is it not a requirement that everyone's zippers zip, but it's also impossible for everyone’s zippers to zip all the time.
The future is uncertain. Sometimes, you just can't make a promised payment you expected to be able to make
What we want to avoid is a situation where a cascade of defaults brings down the whole system.
> If everyone were a bank as Hicks suggests then there has to be a standard limit on the amount each individual may lend without any additional borrowing.
What does “lend without any additional borrowing” mean? Banks typically expand their balance sheets on both sides when they lend. They borrow the money to fund the loan.