Will the Fed Ever Be Able to Boost Lending ?

“Ben Bernanke’s policy of low interest rates is meant to boost lending. But a new study shows that as banks have gotten bigger, the Fed has become less powerful.

Ben Bernanke

FORTUNE — Call it Bernanke’s folly. Or quagmire. Or both.

A new study, which was published on Monday by the National Bureau of Economic Research, suggests that the Federal Reserve’s policy of using ultra-low interest rates in order to encourage lending, might be doing the opposite.

This is, of course, not what Federal Reserve chairman Ben Bernanke has maintained. Ever since the financial crisis, and even a little before it, Bernanke has pushed the Fed to do whatever it can — quantitative easing, Operation Twist, making promises — to keep rates low. Bernanke has said that low interest rates would make it cheaper for people and companies to borrow, and so they will….”

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