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system
does inflation equal more loans?
user
in terms of operations, banks are indifferent to inflation. short rates except right before a recession or near-recession are always lower than long rates, regardless of inflation level, assuming no quotas or price controls. banks produce credit by borrowing short to lend long, so as long as short rates are lower than long rates, they can be expected to produce loans, again assuming no quotas or price controls. in short, from the banks' perspective, inflation does not affect their desire to produce credit.
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