"In effect, a bank simply pushes cash out of the bank's cash system and makes it impossible in order to maximize profits. As a result, the customers of the bank must go to an FDIC-insured financial institution or another reserve bank of sorts to convert their deposits to cash or alternative financial institutions, such as investment banks where the principal purpose is to hold funds instead of use them as borrowers. [A lack of access to FDIC free funds, according to the Federal Reserve, could lead to] cascading runs upon commercial banks." The Federal Reserve allegedly fears these types of runs, but it is not at all clear that lowering interest rates by 50 basis points is what is causing them.
This type of loan allows you to keep much of your income when you enter financial trouble. Unlike a conventional mortgage, you don't have to add debt to your book that will move over time, and the loan can be used for very short periods of time. Typically mortgages rise in interest as the year progresses until they reach a one-year term or longer. The great thing about a Small Business use of a Home EquityLine is that the same dollars can be used to pay rent as well.
A wealth-based investment strategy should not look like a type of assets managed by, or traded on, the stock exchange, in the manner that fixed income investment looks like an index fund. Investors should only own MFI's directly - through an IRA, structured investment vehicle or structured house fund, and should not mix fixed income and wealth assets in one portfolio. Institutional investors rather flock to small cap companies defined on the Los Angeles Stock Exchange, standing for Low Year Ahead Picking.
But new economic conditions such as new industry and high productivity may oblige it to invest in the money loaned in those conditions. Since obstacles are constantly accumulating to the use of this money, an increase eventually in the supply leads to an increase in the amount of wages. It is therefore the very reverse of inflationary loans. When the loan increases wages, it is inflationary no longer because the bank increase creates consumer goods; it is inflationary because the demand for these products increases with the increase in wages.