We get liquidity (spending) in the economy when banks lend money. The modern economy generates money through lending. In other words money is only created when someone borrows. Banks only lend money if they are likely to get it back and they are the main source of loans. The Reserve Bank dropping the interest rate to the banks encourages borrowers but they are loath to borrow because they do not know what will happen next week with interest rates. The banks have stopped lending to people without assets and most assets have dropped in value. A solution is for the Reserve Bank to issue zero interest loans for renewable energy infrastructure spending and to get the money back through taxes paid on the returns of that spending. This will solve the liquidity crisis and the greenhouse gas emissions problem for no cost to the deficit, no inflation, and no increase in energy prices.

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