Credit availability is the necessary seed and moral hazard from implicit guarantees is the amplifier: without ample credit availability, moral hazard is largely moot because you can't borrow regardless of guarantees; with it, guarantees create 'hidden debt' by raising the demand for credit from economic actors who expect a government bailout, and displace lending quality toward the lower end.

causalpending

Speaker

Carmen Reinhart

Evidence Quote

you need the credit availability but it amplifies the demand for credit is what it is how it fits in

Source

Carmen Reinhart on Financial Crises 11/23/2009EconTalk
Created: 6/15/2026, 9:20:19 AM

My Notes

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