Friday, October 23, 2009

A Capital Strike

Zero Hedge: "Total bank reserves with the Fed hit an all time high, surpassing $1 trillion, as banks continue to hoard cash. The amount of extra lending that could have taken place but didn't was $65 billion week over week, or a $130 billion increase in just the past month."

The disconnect in the M-C-M' formulation. There is no need reason for profit-seeking organizations to lend capital if there are few opportunities for profit. In a world market glutted with capacity, it might even take the liquidation of a country or region before 'opportunities' arise. Meanwhile millions are under and unemployed.

1"Excess Bank Reserves, Fed Balance Sheet Assets Skyrocket To Record High Levels" - Zero Hedge

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