Posts

Showing posts with the label Inside Banking: Unraveling Money Creation and the Role of Central Banking

U.S. Economic Growth Slows Amid Tariff Pressures: A 2025 Outlook

-
📉 U.S. Economic Growth Slows Amid Tariff Pressures: A 2025 Outlook As 2025 unfolds, the U.S. economy is showing signs of strain amid a global slowdown and heightened trade barriers. Here's a detailed look at the latest forecasts and implications based on insights from the OECD, Federal Reserve, and key market indicators . 📊 1. U.S. Growth Forecast Downgraded by OECD The Organisation for Economic Co-operation and Development (OECD) has revised the U.S. GDP growth forecast for 2025 to 1.6% , down from 2.8% in 2024 . The forecast for 2026 remains muted at 1.5% , reflecting persistent uncertainty driven by: Elevated trade barriers Reduced consumer spending power Sluggish business investment 💸 2. Tariffs Fueling Inflation & Trade Costs The average U.S. tariff rate has climbed to 15.4% , the highest level since 1938 . These tariffs have raised import costs, which are now being passed on to consumers: Projected consumer price inflation is expected to rise to...
Post a Comment
Read more

Inside Banking: Unraveling Money Creation and the Role of Central Banking

-
Banking lies at the heart of modern economies, playing a pivotal role in the creation and management of money. From facilitating transactions to regulating the money supply, banks and central banks wield significant influence over economic activity. In this post, we'll take a closer look at the inner workings of banking, exploring the processes of money creation and the crucial role of central banking. Money Creation: The Banking Magic Contrary to popular belief, banks do not simply lend out the deposits they receive from customers. Instead, they engage in a process known as money creation through the extension of credit. Here's how it works: Fractional Reserve System: Banks are required to hold only a fraction of their deposits as reserves, typically with a central bank. This allows them to lend out the majority of deposited funds while maintaining the ability to meet withdrawal demands. Lending and Deposits: When a bank extends a loan to a borrower, it effectively creates n...
Post a Comment
Read more