Whatever G. The point remains that higher interest rates means higher rates the banks have to charge. You are essentially nitpicking instead of focusing on the greater point

hehe

the problem is that letting a bank fail will lead to everyone rushing to get their money out of banks

this will be a big bank run and cause every bank to fail

And this will cause a huge economic collapse

But hey, maybe pulling the band aid off quickly and suffering a ton in the short term is better than a slow burn

your an idiot shut up

Ok, banks get loans from the government, they then loan money to customers. The rates they loan to customers is determined by the rates at which they loan from the government. If the government loans banks money at 5%, the banks have to loan money to people at higher than 5%.

​

In order for the government to raise money, they need to make bonds attractive assets. This depends on the current economic situation. In some cases, negative bond yields are attractive to investors. However, in the current economic situation, nobody wants to hold debt, and therefore, nobody wants to buy bonds. The government must raise bond yields to make them attractive at this current moment. It is not a static thing.

​

Finally, M2 will increase as the government will have to print money to help pay for the debt that is coming up. I said the government will print money, not that they are right now.

explain to me what I am missing

ok dawg

You blame the democrats recent bills, but this problem wasn't created in the past 2 years, it is part of a larger cycle, sure the democrats bills might have negative effects, but they are nowhere near the main causes of the economic situation, and really, how could a recent bill cause huge economic changes so quickly?

How does that in any way affect the return on investments that were made with borrowed money?

has nothing to do with political parties. it is about banks and insurance companies borrowing lots of money, making investments, and those investments losing money.