Reply To: Money sitting on the side


2. The money went to non-bank institutions, like Fannie Mae, Freddie Mac, and AIG and foreign banks.

3. Banks are less eager to lend than in normal times. But as the Fed bailout improves their balance sheets, they will return to a more normal outlook on issuing fiduciary media and creating credit. At that point, the Fed will have to drain the excess reserves to prevent significant monetary inflation.