Where does credit card debt and margin debt come from?
So when a bank creates a loan, the new bank credit is created on the spot....it is "created out of thin air". What about margin debt and credit card debt though? The credit card company has to pay the merchant with actual cash , and the broker lending margin has to pay off the seller of the stock with cash
when I see articles like "margin debt hits all time highs, signaling danger in the market", I don't get it. Wouldn't any increase in margin debt mean there has to be a lot of cash with brokers?
or for credit card debt expanding signaling an over leveraged economy...doesn't that just mean that credit card companies were flush with cash? How could one increase without a decrease in another, etc? Aren't margin and credit card debt more like "full reserve bankingL in the sense that they cannot create new credit?