I have a few questions about your responses:
1. Your wrote: “The demand for credit has fallen but the demand for money has risen.” If people are looking to pay back debt and aren’t looking to borrow, where is the demand for money coming from?
2. You wrote: “But until banks use their excess reserves to increase the supply of credit by issuing more fiduciary media, the conditions in the credit market have not changed.” But isn’t the government borrowing an incredible amount of money? Also, how can we say their is no demand for credit when the Government id borrowing so much, shouldn’t that cause interest rates to rise from historic lows?
3. Just generally, I hear so often from people in the Austrian school that Bernanke is printing money to keep the interest rates low so as to stimulate x,y and z sectors of the economy (and not just that the interest rates fell because of lack of demand). Is this not something that people like Ron Paul and Tom have spoken about extensively?