Where did the two trillion go, Hank?
According to the invaluable Big Money is still on strike:
However, despite the attractive rates [and our trillions], banks aren't lending to most consumers and businesses. Weak financial institutions continue to hoard cash and build their balance sheets, with little appetite for risk in new loans.
What do Big Money's "appetites" have to do with anything? It's our money!
That's worsening the economic downturn, especially since it hurts consumers, who drive almost two-thirds of U.S. economic activity.
The Fed has little room left to maneuver on interest-rate policy now and will use other tools.
"They are saying that they have unlimited arrows. As the central bank of the United States, it is the only entity that can write checks on itself without limit, and that's a very powerful weapon the Fed has against the downturn," said Marvin Goodfriend, a former research director at the Federal Reserve Bank of Richmond who's now an economics professor at Carnegie Mellon University in Pittsburgh. "It won't work immediately, but if it is used aggressively, it will work."
Chief among those other tools is to keep lending aggressively; the Fed's balance sheet already has gone from about $800 billion to $2.2 trillion as it pulls out all the stops to confront the worst financial crisis since the Great Depression.
Fed Chairman Ben Bernanke next can scale up existing Fed lending facilities or create new ones, Goodfriend said. The Fed statement said that the central bank was weighing the possibility of purchasing long-term Treasury bonds, which would drive down their yield and make other investments such as corporate and municipal bonds more attractive.
"The Fed did it before in the 1940s and it could do it again," said Vincent Reinhart, a former chief economist of the Fed's rate-setting body who's now a scholar [sic] at the American Enterprise Institute, a conservative policy institute in Washington.
Even McClatchy quotes the same guys who got us into the situation on ways to get us out of it. Sigh.
Look, the banks now have trillions of dollars the taxpayers are on the hook for. What are they doing with it? Where is it? The Cayman Islands? Banks don't just "hoard" money, even now. They put it to work somewhere. But where? Where's the two trillion dollars, Hank?
Sheesh, what do I have to do to restore "confidence" in our frightened ruling class?
Seek out somebody rich and offer to donate a kidney?