>>The problem as I understand it is the banks that got the money aren’t loaning it out, at least not to small businesses in the US.<<
My take on it is completely different. The money supply that I watch has grown at a tremendous clip and we are getting the inflation in commodities and stock prices that one would expect. If banks start to circulate the massive amount of excess reserves they hold, we’ll enter a hyperinflation that will make past South American inflation levels look good to us.
The main reason the economy is struggling is that Washington DC is aggressively regulating businesses across the board in an attempt to get as much done on the green agenda as possible in as short a period of time as possible.
Just look at the jobs actually lost in the Gulf drilling industry, not to mention those not created if sensible policies were in place. How much bigger would the coal industry be with energy prices at this level if we enabled clean coal technology? Instead, we’re aggressively CLOSING coal-fired plants. You could probably question the owners of any business in the U.S. today and find that expansion plans are being subdued by regulators.
Meanwhile, where we are expanding makes little economic sense...windmills and solar and ethanol, in the energy sphere. Sure, shale oil is booming, but liberals would love to stop it, so is it booming as fast as it would without their influence? Doubtful.
In essence, we’re getting the worst of both worlds right now: a looming inflation caused by excessive money growth accompanied by a struggling real economy tied down intentionally by regulators in DC. We already have one side of the misery index, unemployment, at excessive levels; the other side, inflation, is right around the corner. The result is stagflation, a la the late 1970’s under Carter.
Obama is the worst President in U.S. history, but he hasn’t yet topped Carter’s level of the misery index. By election day, he just might. One thing is certain. The next President will be fully justified in using the phrase “It’s Obama’s fault” for at least a year or so into his Presidency, and maybe longer depending upon just how huge a mess he leaves us.
Haven't the banks from TARP until now had the opportunity to make more money passing money back and forth to the government than lending to the public? Isn't that beginning to change? That would break the inflation dam as well , maybe? Sorry, that's what happens when you put ". " instead of ">"
Thanks for the detailed post. While inflation may very well skyrocket when the banks stop hoarding all the money, until they do many businesses are completely frozen. Not quite as bad as 2008 when banks wouldn’t even loan to one another but close. I think the banks are choking Obama off for all the new regulations he wants, icluding Obamacare. His new FHA loan reprieve for the unemployed is him attempting to fire back. It’s going to be class warfare to the extreme for the next year and a half and unfortunately most of us are caught in the middle.