The REAL Cause of Recurring Bank Crises

Prof. Richard Werner explains the important function of credit creation by banks and how, when done irresponsibly, it can lead to bank crises.

Credit creation is divided into two streams:-
Credit used for the real economy
Credit used for financial transactions

When the ratio of credit used for financial transactions increases, asset bubbles and banking crises are likely. Werner briefly talks through past data for Ireland and Spain.

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