However, even if the bank needed to have deposits or collateral on hand, to stop the "printing money" aspect of new loans, this same thing could happen because homes are collateral on mortgage.
Really I think it mostly driven by the supply demand mismatch, and in particular a belief that local governments will not allow the supply to meet demand.
There's a great recent Fed paper that shows the absolute huge correlation between prices and the supply/demand mismatch. It further shows that demand volatility has been higher than supply volatility so recent effects are explained by that demand volatility.
The only way to solve this is to out build demand and shock prices down. IMHO.
Really there is nothing magic about loans. Handing a bank 1,000$ and thinking you still have that money rather the the bank owing you 1,000$ is how money is created.
https://fred.stlouisfed.org/series/TOTRESNS
Banks did not want to lend out money and lowering the reserve percentage is one of the few tools they have to try to encourage banks making loans. It just so happens that it didn't do cause an uptick in loans
On the other hand, if they didn't need cash on hand to offer loans any random small bank could loan a 1 trillion dollars to someone. They can't because they don't actually have that money.
Consider a bank with 3 billion dollars total and 2 billion in deposits. They only need to care about reserve requirements on 2 billion and can use the other 1 billion for anything because it's their money. In effect cash on hand are assets and deposits are debt. Reserve requirements are just a question of how much leverage they can legally have.
The reserve rate was taken to 0 during covid...
Falling interest rates have been great for people as more people own homes than at any other point in history.
But printing trillions more last year was a flaw. At least got physical proof that MMT doesn’t work.
I'm not sure about elsewhere, but rates of home ownership in Australia have declined since the 1980's [1], neatly coinciding with a decline of interest rates [2] and a rise in house prices as a proportion of income [3].
[1]https://www.aph.gov.au/About_Parliament/Parliamentary_Depart... [2]https://www.rba.gov.au/statistics/historical-data.html [3]https://www.aph.gov.au/about_parliament/parliamentary_depart...
Edit: for example, Sri Lanka's outcomes are exactly what have been predicted by MMTers, and Sri Lanka took exactly the opposite of what MMTers have been recommending forever:
https://twitter.com/fadhelkaboub/status/1516630826896744451?...
I don't know what it is about MMT but it always seems like people are intentionally not listening to what people say, and then inserting other words in their mouth. Marxists like Henwood are particularly prone to doing that, for example. Critiques of MMT seem to be based on intentional misunderstanding and misrepresentation.
Not in the US, and this article is about Americans.
Seriously, you seem to think there's something profound about "total population numbers go up, all the numbers go up"?
Look around the globe, for how long have all central banks been doing nothing but printing money? Printing money to economy just like adrenaline injection to body, it for sure helps in some scenarios but it also kills if you don't know when to stop. All the central banks delayed the crisis by printing money and got away by manipulating the data to make CPI looking low. It would be probably okay if they did that only one time or two.
So here we are.