“If there is credit expansion [by the central bank], it must necessarily lower the rate of interest. If the banks are to find borrowers for additional credit, they must lower the rate of interest or lower the credit qualifications of would-be borrowers. Because all those who wanted loans at the previous rate of interest had gotten them, the banks must either offer loans at a lower interest rate or include in the class of businesses to whom loans are granted at the previous rate less-promising businesses, people of lower credit quality.”
From his book, Marxism Unmasked: From Delusion to Destruction (7th Lecture, “Money, Interest, and the Business Cycle”).
9:51 am on December 9, 2008
