All the Fed can really do is offer cheap credit. If no one wants to take out a loan the Fed runs into the “pushing on a string” problem. They can’t force anyone to borrow money.
A “damaged demand function” sounds like a fancy way of saying that consumers haven’t got any free cash around with which to buy anything. Which isn’t surprising when you take into account soaring Obamacare costs, taxes, wages suppressed by competition from immigrants, and the loss of high paying blue collar jobs.
I seem to recall bankers being threatened if they didn't accept government monies. (TARP, I think.) Almost as if they didn't want to take the strings it was attached to, and then they were made an offer they can't refuse
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