The Problem With the Banking System

Since the height of the U.S. financial crisis in 2008, bank-lending has been stagnant even as the monetary and fiscal stimulus enacted to counteract the contraction in private sector economic activity has been the greatest in U.S. history. This has led to speculation about whether the stimulus has been large enough to be effective, whether more is necessary, and whether it will work. There have been accusations that the banks, especially the money centers, are now essentially government-supported hedge funds and not lenders.

These are worthy topics concerning the failure of the private sector and bank-lending as the theory has promised they would to the level of fiscal and monetary stimulus provided. The discussion, though, takes for granted that the 2008 crisis and resulting stimulus is the genesis of the problem -- that something may have structurally broken in the banking system because of Lehman Brothers' demise and associated failures at the time....522 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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