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.
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Reserve Bank Credit Chart Courtesy of the Saint Louis Fed
2 comments on “Reserve Bank Credit Chart Courtesy of the Saint Louis Fed”
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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/