How To Fix The Economy: More Loans, Not Bank Reserves! 2

The Fed gauges conditions in financial markets, and the markets try to predict the Fed - is this not a circular reference?

In our discussion of what role the Fed’s MBS purchases played in the leadup to today’s red hot US housing market, we showed that mortgage lending, not QE, was the crucial driver (and still is).

This is where government intervention can help, by encouraging private sector banks to make more loans.

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