Yes, well the problem is that the credit is not flowing by and large, not yet at least.
Indeed, and propping up zombie banks is the same as pouring money into a black hole.
The zombie banks need to keep every dime poured in because that improves their balance sheets. They have no interest in loaning money out because their ratios are still so bad. About all that they can do is fund mortgage refinances that are immediate repurchased by the government (e.g. FNMA).
This is precisely what Japan saw for the past 20 years. They’ve been pouring money into zombie banks since 1989.
Sure. Run the printing presses. But if you prop up zombie airlines and zombie car manufacturers and zombie newspapers and zombie banks (instead of creating a brand new bank that has no prior liabilities) you will just get DEflation.
The opposite of INflation.
I grant that it is counter-intuitive to see a currency increase in value while you are running the printing presses full speed, but that’s what we saw with the wealth destruction globally in 1945...and it’s what Japan has seen since 1989.
Deflation is not sustainable. It destroys equity investment paradigms. You can’t make money during deflationary times by buying and holding a building whose rent is less each year than the amount of value that the building loses.
The whole reason to have central banks in the first place is to prevent deflation from destroying entire national economies as demonstrated by the “buy and hold” process failing to work during deflation...that triggers a race to the bottom.
The Fed and Central banks have failed. Politicians and the news media have failed to point out the above to the leaders of the world’s central banks, too.
This will lead to global rioting if left unchecked.