EDITOR NOTE: The main point behind the Fed’s massive QE program is to help boost the post-pandemic economy by getting businesses to expand their operations using cheap money, and to get banks issuing loans, increasing their profitability, in turn helping fuel the expansion. So far, all it got in return are record-high savings rates, and an overall drop in borrowing and lending. In the meantime, government spending and the national debt have risen to record levels while prices of just about everything--from big-ticket items to groceries all the way down to chicken sandwiches--appear to be hot on their tracks. The dead giveaway is JPMorgan, as the bank appears to be taking a position on what most banks are merely thinking: that the current interest rate suppression can’t hold. JPM’s massive cash reserves are just waiting patiently for that moment when the Fed has to call it quits and raise interest rates. Inflation is surging strongly, and it's likely not going to be such an easily controllable deviation nor is it a “transitory” blip. And when yields are finally allowed to rise, what comes next is a humongous collapse in equity values. Not convinced? Check out these charts.
Let's investigate the relationship between the Fed's QE program, bank lending, and alleged stockpiling of cash.
In an effort to stimulate bank lending and thus the economy, the Fed launched a massive QE program that lowered interest rates and crammed money into banks.
Let's take a look at some numbers.
January 1973 Numbers
Commercial and Industrial Loans: $135 Billion
Fed's Balance Sheet: $0
Bank Deposits: $599 Billion
Bank Loans and Leases: $405 Billion
May 2021 Numbers
Commercial and Industrial Loans: $2.547 Trillion
Fed's Balance Sheet: $7.867 Trillion
Bank Deposits: $17.079 Trillion
Bank Loans and Leases: $10.342 Trillion
Commercial and Industrial Loans, Bank Deposits, Bank Loans and Leases Percent Changes
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