The Fed lent and purchased worthless assets to the tune of $29 trillion in their efforts to save the economy from collapse in 2008/2009 and beyond. Yet the economy does not act as if $29 Trillion of aditional liquidity has been added to the economy. It seems to me the obvious question is why didn’t the economy react as one would expect?
I went to the New Economic Perspectives web site to see if they had the answer. I found the article Bernanke’s 29 Trillion Dollar Fog of Deceit from December 13, 2011.
As I reported over at Great Leap Forward, a new study by two UMKC PhD students, Nicola Matthews and James Felkerson, provides the most comprehensive examination yet of the Fed’s bail-out of Wall Street. They found that the true total cumulative amount lent and spent on asset purchases was $29 trillion. That is $29,000,000,000,000.
This does no answer my question. The answer may be somewhere else on the web site, so perhaps I missed it.
I don’t really care so much about who got the money initially as I want to know where it now sits. Where can $29 Trillion dollars have gone that has little impact on the economy, wages, or employment? Why has nobody researched this question, and told us why the economy has not responded? Since most U.S. money ends up in some account that the Fed keeps data on, surely the Fed knows where this money is – categorized by major sectors. It would be very educational to economists and government decision makers to see where the money went. Why would policy makers and academics want to opine on policy without knowing this vital information?
I’ll Google this next to see if there is an answer out there. Maybe, one of my astute readers can beat me to the punch and supply the answer.