I am in full agreement with Mr. Greenspun when he says, “It surprises me that people are willing to pay attention to the GDP statistic.”

As an investor, one can easily see the decline in economic opportunity and productivity (in the last ten years) by comparing the change in value of an investment made in stocks to the change in value of an investment in gold. As of today, the DJIA is just about flat over ten years. However, the price of gold has roughly tripled.

@Jeffrey Tucker
“the money stock is falling because lending has collapsed despite vast injections of reserves.”

My understanding is that the money stock is falling because the injections of reserves through public credit creation are insufficient to replace previously created credit (existing money) either repaid, as part of ongoing deleveraging, or destroyed, through default.

It is of course true that private credit creation would increase the stock of money, or at least slow the decrease.

@Johnathan
“Is it that the Fed is now paying interest on excess reserves, so member banks aren’t loaning all this new money out?”

If it were the case that banks actually loaned out existing money (such as this freshly created Fed money) then there could not be any new money. The fact is that banks create new interest-bearing credit which is instantaneously redeposited in the system.

The liquidity of a Bank’s reserves merely means that it is better able to pay expenses, salaries and dividends, and to handle defaults.

The problem that Banks have is that there are no longer enough creditworthy individuals, projects or enterprises left to whom to lend.

The fact that the Fed is paying interest has little bearing on the banks proclivity to lend. Even if the rate were negative, they would probably be disinclined to lend at the moment.