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"What many claimed was that QE would increase lending in the real economy, which would obviously boost the economy (because more real economy lending = more spe
by rsync 9y ago
"What many claimed was that QE would increase lending in the real economy, which would obviously boost the economy (because more real economy lending = more spending = more demand = more economic activity). That hasn't really happened, and I hope economists learned the lesson."
I don't know that they have learned that lesson ..
My understanding is that the failure of institutional lending in response to QE is still considered "a mystery" by mainstream economists, etc.
I personally think that banks are in the same position Apple is in with their x00 Billion dollars hoarded overseas ... they are terrified that the system could come flying apart at any moment and are therefore sitting on cash or reserve assets to protect against this.
- gozur88 9y ago>My understanding is that the failure of institutional lending in response to QE is still considered "a mystery" by mainstream economists, etc. As the Austrian school economists pointed out during the crisis, you can print money, but you can't print borrowers - the banks need qualified borrowers to lend to, and in the middle of a financial crisis there aren't as many. Of course the fed can't allow cascading bank failures, but once the banking system is out of danger pouring in more money won't do much.