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 ReinhartEvidence Quote
“you need the credit availability but it amplifies the demand for credit is what it is how it fits in”
Created: 6/15/2026, 9:20:19 AM
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