No shortage of money

Bank lending to small and medium-sized businesses continues to expand, up 10.5% in the year ending Feb. 13th. This is a good sign that the economy continues to grow.

This measure of bank lending to businesses has been rising at double-digit rates for over two years. With banks absolutely flush with reserves, the only constraint on bank lending is a) willingness to lend and b) willingness to borrow. The fact that lending has been rising steadily for over two years is good evidence that banks are more willing to lend and businesses are more willing to borrow. Both suggest rising confidence, and that is the force that is underlying the slow but steady expansion of the economy. Not the Fed's QE, and not government spending. The growth we are seeing is the result of the private sector healing, not the public sector stimulating, despite what you may read in the papers. The Fed is facilitating the increased lending, by supplying ample amounts of reserves, but not driving it.