Borrowing by consumers and businesses is picking up sharply. The amount of loans remains far below where it should be relative to the liquidity in the banking system. This means there is more growth to come.

The chart from the FED is unequivocal – bank lending is recovering which means capital is getting redeployed into the economy. That said – the amount of loans remain far below where they could be if cash was being utilized by the banks for lending as is has been in the past. Total loans could grow by nearly $1 trillion if monetary velocity returned to prior levels. There remains a lot of “dry powder” to fuel more economic growth. Jeb B Terry, Sr. June 15, 2014

St Louis Fed bank credit chart 6-13-14

C-I Loans vs M1 6-13-14

Aberdeen Investment Management – a guide service for micro-cap technology investment

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