If They Have a Gun To Their Heads, Do the Banks Lend?

[SammySouth]

Here we are three years after the financial crisis of 2008. The banks got bailed out. Their junk mortgages now sit on the balance sheet of the Federal Reserve. In exchange the Fed gave them face value in cash for their junk. Where did they get the cash? They created it out of thin air of course.

Then as if some sort of sick joke, the money given to the banks to make them whole on their bad decisions hasn't seen the light of day. It still sits at the Fed as monetary reserves. Why haven't the banks lent out the money ten fold through the magic of fractional reserve banking into new loans? Simple. The Fed is now paying the banks interest to keep their money deposited with them.

Continued Here:

[Flake]

it isn't necessary to hold a gun to their head to get them to do what they want to do anyway. Get the government out of the way and let them have some comfort in their knowledge of what the next few years of regulation and taxation will be like and the economy will right itself. There is no mystery here.

Holding a gun to somebody's head is why we are in this mess.