– How The Fed Holds $2 Trillion (And Rising) Of US GDP Hostage (ZeroHedge, April 28, 2013):
Sadly, since there never is a free lunch, what the above data tells us is that due to the persistent refusal of banks to take over from the Fed as lender (and money creator) of main resort over four years into the “recovery”, that $2 trillion of the $16 trillion in US GDP is now held hostage by the Fed. In other words, if it wasn’t for the Fed’s “narrow liquidity“, “low power money“, whatever one wants to call it, creation, US GDP would be 12% lower, or at June 2007 levels. It also means that virtually every incremental dollar of US GDP “growth” comes solely courtesy of Ben Bernanke’s narrow money spigot.
And since the US has to “grow”, since US GDP has to be spoonfed to the masses as increasing at a ~1.5% annualized rate every quarter, and since US banks continue to not lend (and in fact their eagerness to not lend is further cemented by the far easier returns they can generate courtesy of the Fed in chasing stocks, and not take on NPL risk in exchange for meager 4-5% annual returns, which means a feedback loop is created where more QE means less bank lending means more QE means less bank lending), can all trivial and absolutely meaningless discussion over whether the Fed will halt QE (now or ever) finally end? It absolutely never will, until everything one day comes crashing down.