What Credit Crisis?
For almost the last year (starting in November 2007), I have posted at least ten times (see here, here, here, here, here, here, here, here, here, and here) on the theme "What Credit Crisis?," featuring graphs like the one above, which shows Total Bank Credit at all U.S. commercial banks (data here) at an all-time historical high of almost $10 trillion as of two weeks ago (October 8, 2008).
A new working paper from the Minneapolis Federal Reserve, "Myths about the Financial Crisis of 2008," confirms much of what I have been saying for the last year, here is an excerpt:
The financial press and policymakers have made four claims about the nature of the crisis.
1. Bank lending to non-financial corporations and individuals has declined sharply.
2. Interbank lending is essentially nonexistent.
3. Commercial paper issuance by non-financial corporations has declined sharply and
rates have risen to unprecedented levels.
4. Banks play a large role in channeling funds from savers to borrowers.
Here we examine these claims using data from the Federal Reserve Board. At least based on data up until October 8, 2008, we argue that all four claims are false.
MP: Commercial loans are at an all-time high (data here) through October 8, consumer loans are at an all-time high through September (data here), and even real estate loans are at an all-time high through September (data here). Where's the credit crisis?
Thanks to Alex Tabarrok at Marginal Revolution.