If liquidity isn’t added to the economy, loans are defaulted on and the banks take losses. At the same time people go withdraw their money from the bank as the economy contracts, but the banks don’t have it. This leads to bank runs and a domino-like collapse where everyone with exposure to the failed bank is in trouble.

Check it out on YouTube ⬇️

https://youtube.com/shorts/FpxnSyCc_Ys?si=D09s4CazKQ3-ZF9x

#debt #banking #liquidity #economy