Q. If the banks are flooded with money, why there is a liquidity problem? Banks should have enough money from the government to lend consumers and corporate and create credit. So where does the money go?
A. There is a time lag between when the banks receive liquidity from the Fed and the time the banks lend the money and the time the economy finally recovers. The time lags could one to two years.
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George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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