alt Hacker News> This is just what banks do…
Sure. Sometimes they cause global financial crises as part of that process.
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No but like this is how money supply works.
Loans are sold off, which means that they can raise more money to make loans. Each time you do that, you create more money out of thin air, which is profit.
The problem is, it only works if everyone believes.
THe problem with 2008 is that people stopped believing and demanded banks settle immediately. which then meant that they needed to raise cash, which meant looking at their assets, which meant looking at the risks of those assets, and then it went to shit.
You might as well say that banks giving mortgages caused that. Sure it happened as part of the process but that wasn't the thing that caused the problem.
Yes, and sometimes they turn Tulips[0] into value stores. Or GPUs for that matter[1].
[0] https://en.wikipedia.org/wiki/Tulip_mania [1] https://nvidianews.nvidia.com/news/nvidia-partners-with-apol...