dlaw

Does the TED Spread Really Matter?

This is a good article, but reaches a myopic conclusion.

If banks are not doing business with each other, the money multiplier goes down - quickly. Financial crises happen exactly because firms and individuals follow courses which are logical for them individually, but destructive to the marketplace.

Just because we can't quantify it easily, doesn't mean the marketplace itself doesn't have enormous ecomonic value. I fear we are going to find out how much value - when we lose the marketplace.