Check it out. Hardly any picture illustrates more clearly that there is ample money available in the financial system, but the banks are not lending it.
Check it out. Hardly any picture illustrates more clearly that there is ample money available in the financial system, but the banks are not lending it.
Can these numbers be used to estimate the inflation that would result if that extra $1.2 trillion WERE suddenly lent out to consumers?
Sidney [#1]: Good question. To make such an estimate, you’d need to know the “velocity” of money: the average rate at which a dollar changes hands during a given period. The faster the velocity, the greater the potential for inflation. This article is helpful: http://www.ritholtz.com/blog/2008/12/the-velocity-factor/