“Now, it’s true that the Fed has taken unprecedented actions lately. More specifically, it has been buying lots of debt both from the government and from the private sector, and paying for these purchases by crediting banks with extra reserves. And in ordinary times, this would be highly inflationary: banks, flush with reserves, would increase loans, which would drive up demand, which would push up prices.
But these aren’t ordinary times. Banks aren’t lending out their extra reserves. They’re just sitting on them — in effect, they’re sending the money right back to the Fed. So the Fed isn’t really printing money after all.”
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Personally I’ve seen a shrinking of credit available. Card companies are canceling zero balance cards I’ve had for 10 years. BofAssholes raised the rate on one with a balance to 18.73%. Had the card since 1991 never a late pay. I called them as they ussually lower the rate when asked, but this time they told me to suck an egg and then reduced my limit to drive the point home. They do not want to lend money.
Only one card still sends out promotional checks.
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We can all see the current credit situation: A few pockets of tight money, a lot of normalcy, in the sense of a return to historical averages (beyond just the last 5-8 years of amazingly loose money), and then a continuing river of easy govt money for housing.
Just because total lending now may be less than it was at the height of once-in-a-hundred year credit bubble doesn’t mean money is tight in any absolute sense. And the history of our govt is that once it starts to spend to solve a temporary problem, it cannot be stopped. So the easy credit the govt is perpetuating now through a host of existing and new programs will continue when economic activity picks up again, as it always does in economic cycles.
