Many banks today have “excess liquidity,” enabling them to lend, yet they choose not to because of fears they won’t get paid back. We wish at this moment in time that they would lend more to get the economy moving again. The difficulty is that once the economy starts to strengthen and recover, that is precisely the time when our banks would decide to start lending more. And that is precisely when we want the banks to stop lending too freely, lest we stretch the economy to the limit once again.
Happy Halloween, everyone.
