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>   
>   (email exchange)
>   
>   Yesterday I was rereading Ben Bernanke’s Wall Street Journal piece of July 21 2009.
>   I noticed that the Krugman words quoted in your blog (“The banks don’t need to sell
>    securitized debt to make loans — they could start lending out of all those excess
>   reserves they currently hold. ”) were the same as Bernanke’s (’But as the economy
>   recovers, banks should find more opportunities to lend out their reserves.’).
>   
>   Why would Bernanke say this? Since when do banks need to lend out of reserves?
>   

They don’t. In fact, at the macro level they can’t. Lending does not ‘use up’ reserves.

Both Krugman and Bernanke unfortunately don’t seem to fully understand monetary operations.

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This is more interesting than the year over year chart, as last year had quite a few shocks in it.
We went from growing demand a couple of years ago to falling/flat demand currently.

The rest of the Valance charts show much the same.
After a large fall it generally looks like it has flattened out, but no sign of a general recovery.
And a lot of indicators are still falling.
Personal income, for example is still falling by a few tenths year over year.
And core CPI is in a nose dive.

The difference this time around may be the zero rates lingering around long enough take effect.
Might be that with 0 rates we need a lot lower taxes for a given amount of gov spending than otherwise.

No harm in leading with a payroll tax holiday, per capita revenue sharing for the states, and a federally funded $8/hr job
for anyone willing and able to work that includes health care.

(I’m out for a few days joining Karim in DC for meetings.)

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