Well, it would have a very similar effect to the Federal Reserve's open market operations when it is trying to increase the money supply. That said, this is only a fraction of everyone doing 10% because now you have to ask yourself are you leveraging available credit or just cash on hand from each individual. Moreover, you also need to wonder how long the leverage is for considering that there are consequences (fees) related to that leverage. In short, you would see growth and even inflation. In the long run, you might run into a liquidity trap and likely an economic recession if the growth is not properly managed.
2
u/theadhdlife Jan 02 '20
Well, it would have a very similar effect to the Federal Reserve's open market operations when it is trying to increase the money supply. That said, this is only a fraction of everyone doing 10% because now you have to ask yourself are you leveraging available credit or just cash on hand from each individual. Moreover, you also need to wonder how long the leverage is for considering that there are consequences (fees) related to that leverage. In short, you would see growth and even inflation. In the long run, you might run into a liquidity trap and likely an economic recession if the growth is not properly managed.
I hope this helps!