MSE news: £500m PPI compensation paid out in March

£500m paid out. That could mean a £500m boost to the economy if all the lucky recipients go out and spend it. :j

OR

Given the fractional reserve nature of banking, £500m less in banks coffers could mean ten times that less to lend. So £5bn less to lend to businesses, homebuyers, and shoppers - so a £5bn drain on the economy. But the banks had mostly made provision in their balance sheets at the start of the year so no harm done, was there? :question::question::question:http://www.moneysavingexpert.com/news/protect/2012/05/recession-is-deeper-than-feared

oldvicar wrote: »

OR

Given the fractional reserve nature of banking, £500m less in banks coffers could mean ten times that less to lend. So £5bn less to lend to businesses, homebuyers, and shoppers - so a £5bn drain on the economy. But the banks had mostly made provision in their balance sheets at the start of the year so no harm done, was there? :question::question::question:http://www.moneysavingexpert.com/news/protect/2012/05/recession-is-deeper-than-feared

OR

it could mean 5bn less debt in the system, when Banks have to weather the storm from the Greeks exiting the euro.

In the past the banks created 'debt' which is always a bad thing. But now they've changed and they issue 'credit' instead, which is something good. The more credit the better! As long as we're on a straight road who cares if we're heading towards a cliff?