by Jesse

The increase in the monetary base created by the Fed’s monetization of debt is striking, not seen since the early stages of the Great Depression.

Banks are not lending despite the massive quantitative easing. They are fat with reserves, paying huge bonuses again, and obviously doing something with their money other than providing funds for the commercial activity of the nation.

Excess Reserves are an accounting function. The banks themselves do not reduce their reserves significantly through lending in the aggregate, but seek to minimize the opportunity cost of reserves. But it is symptomatic in the sense that the lack of reserves is most definitely NOT an issue with lending.

Continue reading US Commercial Banks: the Turkeys Are Stuffed