http://3.bp.blogspot.com/_djgssszshgM/SWJ0FbCxyDI/AAAAAAAAAwI/59XxuWbaQaM/s1600-h/money+multiplier.png

http://gregmankiw.blogspot.com/2009/01/disappearing-money-multiplier.html

Econ prof Bill Seyfried of Rollins College emails me:

Here's an interesting fact that you may not have seen yet. The M1 money multiplier just slipped below 1. So each $1 increase in reserves (monetary base) results in the money supply increasing by $0.95 (OK, so banks have substantially increased their holding of excess reserves while the M1 money supply hasn't changed by much).

I'll take Econ 101: "what is deleveraging?"

Tunacomm, sorry to tell u, but Columbia is shining in big black fonts today. Unlike hfscomm, and you, once SE reads your post.

so RS, what is this supposed to mean? hopefully you actually have a handle on this

ooops tuna suddenly turned into a little gray font again, too bad, I will never know what is he saying...

Well, It tells me the Federal Reserve's policy is not working. The government should know that medium and smaller banks are more likely to lend to small and medium size businesses than the big banks they favor. That this transfer of wealth from depositors to banks is doing more harm than good and the government intervention has not been as succesful as Larry Summers would have you think.

funny hfs does have a sense of humor

No, it means monetary policy cant make negative interest rates. Ultra low interest rates aren't working anywhere else either, big banks or no.

And small banks WONT be more likely to lend, as they do not have the cushion of capital markets income. Regulators throughout the OECD are demananding that banks hold MORE capital, not less, and all banks fear the expansion of mark to market accounting. No bank CEO in his right mind would expand lending when they can just surf the yield curve.

The gov't dropped rates to zero, invested in the banks with the expectation that they would lend. Now the banks say, thanks for the help but not interested, but ok we do deserve a hefty salary. Tells me the economists running Washington have been taken for a ride.

"columbiacounty
about 11 hours ago
stop ignoring this person
report abuse
rs: no one cares what you think."

Interesting theory, columbiastalker. That must be why Riversider's posts are grayed out and shriveled and yours are in large font, boldface, all caps. Yes, I'm sure that's the explanation.

No, riversider, the US and European goverments are SAYING "lend more", but 100% of the enacted and proposed legislation, INCLUDING THOSE CONCERNING DERIVATIVES, say 180 degrees the opposite: de-lever and preserve capital.