It has been an oft heard refrain these past five years that the recovery is being held back by banks’ reluctance to lend money. Recently even Stephen Moore of The Heritage Foundation was bemoaning how all the Federal Reserve’s quantitative easing had only produced large excess reserves for banks, not the desired new lending. However, as I will show below, credit markets are working fine and most credit-worthy businesses are finding the credit that they need. The recovery might have been held back in its early days by tight credit, but that is certainly no longer the case.
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