As I have pointed out before, banks keep on lending more and more money to the private sector. The whole problem about a credit freeze is centered on loans between and among financial entitities. Financial commercial paper continues to decline, but nonfinancial CP is expanding. This chart shows loans made by banks to small and medium sized businesses, and those are expanding at a fairly rapid clip: up 14% in the past year. Indeed, Total Loans and Leases of Commercial Banks rose in the latest reporting week to another record, all-time high of $7.049 trillion, according to the Federal Reserve.
Why are we only hearing the bad news and not the good news?