I recently posted data showing how companies are sitting on lots of cash, presumably in part because the business climate is not conducive to investment and job creation. I also showed a cartoon that makes the same point in an amusing – yet insightful – manner.
Now let’s look at data from the Federal Reserve, showing the amount of “excess reserves” that banks are holding at the Fed. This is money that is available for loans, but financial institutions apparently don’t see many profitable opportunities to put that money to work. This is perhaps the biggest indictment of Obamanomics since banks exist to make money issuing loans.
Just as I warned in my previous post, there presumably are many factors that are causing banks to keep more reserves than necessary with the Fed. Having been burned during the financial crisis, banks probably would be more cautious, even if Obama was pursuing good policy. Nonetheless, it certainly seems like Obamanomics is just as much of a failure as Bushnomics – which makes sense since both mean bigger government and more intervention.
[...] on this blog have featured charts showing that Obama’s policies are not working (see here and here). I even showed a cartoon making the same point.And I cited a column with data comparing Reagan and [...]
[...] on this blog have featured charts showing that Obama’s policies are not working (see here and here). I even showed a cartoon making the same point.And I cited a column with data comparing Reagan and [...]
[...] and you don’t solve those problems with a loose-money policy – especially since banks already are sitting on $1.6 trillion of excess reserves (why lend money when the economy is weak and you may not get [...]
[...] spending, and you don’t solve those problems with a loose-money policy – especially since banks already are sitting on $1.6 trillion of excess reserves. (Why lend money when the economy is weak and you may not get [...]
[...] check out this picture of how much money companies are keeping on the sidelines and this one about loanable funds that banks have deposited at the Fed. Both are compelling signs that investors and entrepreneurs don’t trust the nonsense coming [...]
[...] commented on the failure of Obamanomics, with special focus on how both banks and corporations are sitting on money because the investment climate is so grim. Not exactly [...]
[...] commented on the failure of Obamanomics, with special focus on how both banks and corporations are sitting on money because the investment climate is so grim. Not exactly [...]
[...] commented on the failure of Obamanomics, with special focus on how both banks and corporations are sitting on money because the investment climate is so grim. Not exactly [...]
[...] Low interest rates, some argue, may not help the economy if banks don’t have any money to lend. Yet I’ve already pointed out that banks have more than $1 trillion of excess reserves deposited at…. [...]
[...] Low interest rates, some argue, may not help the economy if banks don’t have any money to lend. Yet I’ve already pointed out that banks have more than $1 trillion of excess reserves deposited at…. [...]
[...] Low interest rates, some argue, may not help the economy if banks don’t have any money to lend. Yet I’ve already pointed out that banks have more than $1 trillion of excess reserves deposited at the…. [...]
[...] With banks and non-financial companies sitting on trillions of dollars because of the negative economic environment created in part by his policies, this new poster is both funny and troubling. [...]
[...] Moreover, what’s the point of “pushing on a string” with easy money if it just means more reserves sitting at the Fed? [...]
[...] Here’s the bottom line. I think, at best, the Fed is pushing on a string. Why will it help to create more liquidity when banks already have more than $1 trillion of excess reserves? [...]
[...] the thing. Corporations are sitting on huge piles of cash. Even banks have over $1 trillion in “excess reserves” parked at the Fed. They have plenty of money to make loans. And, [...]
[...] again, we know banks are keeping more than $1 trillion of excess reserves parked at the Fed and maybe it will stay that way forever. In which case the private sector is inadvertently [...]