Even though the Fed is practically giving money away, banks just aren’t lending. Economist Paul Kasriel says a Fed pledge to buy bonds until credit growth hits 7% would be more effective.
Even though the Fed’s balance sheet continues to grow quickly, it has not grown quickly enough to make up for the meager growth in bank credit holdings…
“This might require Fed securities purchases of $300 billion in one year or it might entail Fed securities purchases of $3 trillion in one year,” he says.
It’s one of the more interesting outside-the-box ideas I have heard, and it would absolutely demolish the US dollar.
