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Credit Squeeze |

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| This article is part of WikiProject Definitions. Consider editing to improve it. View articles referencing this definition. |
Credit Squeeze in simple terms refers to situation wherein interest rates are higher than normal due to adverse economic situations.
A ""credit squeeze"" occurs in a debt-based monetary system when interest rates rise and new debt money is difficult to access without a high credit rating. At such times, marginal borrowers, or those who have borrowed at the end of any debt-induced asset ""bubble"", get ""squeezed"" out of further borrowing, and a contraction in the growth of the money supply occurs, triggering a slow-down in the growth of previously inflated assets. Those assets are then acquired by the private banks through widespread foreclosure or bankruptcy and re-sold to those with the money to buy the distressed assets.



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