I caught this from Gary Shilling:
“Conventional monetary ease is now impotent with the federal funds rate close to zero , the money multiplier collapsed and banks sitting on hoards of cash and over $1 trillion in excess reserves. Sure, large banks report to the Fed that they are easing lending standards for small business, but after the intervening financial crisis, many fewer potential borrowers are deemed creditworthy than in the loose lending days. Furthermore, the small business trade group, the National Federation of Independent Business, reports that 91% of small business owners have had their credit needs met or business is so slow that they don’t want to borrow. The Fed is pushing on the proverbial string.”
Makes sense. Easy to agree with. However, how come the economic types across the board never write about the obvious:
1. Empty commercial space is everywhere. What fills it up? When? Further, commercial space is being arbed away by the internet. Do movie theaters, sporting venues, book stores, electronics store, etc. survive in the face of home theaters and online shopping? The real question for me are empty stadiums. Small cities can’t support them. Jacksonville, San Diego, etc. have empty pro sports stadiums. Canary in the coalmine of future issues?
2. Everyone knows the Feds pulled out their credit card (funded by us) to pay off our credit card. Where is the economic development there? Sure, people can rap on about aggregate economic statistics, but to what end? If all economic activity is just Federal credit card spending, growth estimates and recession debates serve little purpose.