Where does Money go?

Discussions about trading the Forex markets.
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oem7110
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Where does Money go?

Post by oem7110 » Mon Sep 27, 2010 10:24 am

If the loan rate between banks is slightly increase from 0.16% to 0.24%, then it implies banks have less money than previous status. On the other hands, the local currency is going up comparing with preious status, that means money is flowing from foreign countries into local country, it implies money supply should be increase, but the loan rate from banks tell us they have less money than previous status, so does anyone have any suggestions on where money goes under this situation?
Thanks in advance for any suggestions
Eric

Moto moto
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Post by Moto moto » Mon Sep 27, 2010 5:36 pm

"If the loan rate between banks is slightly increase from 0.16% to 0.24%, then it implies banks have less money than previous status. "
OR
it means that to supply the same amount of money they just require a higher rate of return as they think the risk has increased.

"On the other hands, the local currency is going up comparing with preious status, that means money is flowing from foreign countries into local country"
Is this necessary true or just an assumption or economic theory?

", it implies money supply should be increase, but the loan rate from banks tell us they have less money than previous status,"
see first and second question and answer.

"so does anyone have any suggestions on where money goes under this situation? "
As 2008-09 showed us maybe it never actually existed in the first place and it is the leverage that has been reduced.

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