Jeffrey Snider wants to know, here:
I think everyone understands that credit is vital to businesses, but they also intuitively understand that customers are probably more vital (and the largest problem for businesses of all sizes since 2008). I don't think Chairman Bernanke can claim that interest income is trivial and therefore not really a consideration, both in an empirical sense (the numbers don't bear that out, especially at the margins) or, perhaps more importantly, in the perceptions of the voting public. If he does, then why is such a trivial amount to savers so important to banks? It cannot be the money multiplier effect since bank net income (the pivot in this trade-off) plays no role in that presumed multiplier - ZIRP is a technique of expanding bank balance sheet capacity. It is the method of circulation that is at issue here, and the Fed and its global central bank cousins are placing all their chips on circulating money indirectly through credit creation. If that is a superior option, then they should be able to demonstrate it.
