antiquary

The Virtue of the Republic

"So essentially, by artificially lowering the price of capital (interest rates) supply dries up, as it does in every market where price fixing is allowed. If you can't earn a decent return on your money, why would you take it out of your wallet?"

The posit you take as granted is that the ceiling set by the Fed is below a decent return. This is not necessarily true; what a "decent return" is will depend on what the alternatives are in the current economy. The general level of paranoia is not a legitimate factor. I think the way you get banks to lend is by showing them that they're being outcompeted by other people or entities who are lending, even if that has to be the Federal government for a time to prime the pump.