Cheap money means low interest rates. The lower the rate, the less you pay for the loan; ergo cheap money. Easy money means loans are easily available. The more credit available and the more willing lenders are to loan, the easier it is to obtain a loan.
We have cheap money. We do not have easy money. We did for a bit during the second term of President Bush -- liar loans, massive financial debt without the usual restrictive convenants, etc. -- but that is the past. Lending institutions are insisting on proper vetting, proper security and convenants, etc. As a result, macro loan figures are falling.
Low interest rates allow the institutions to make easy profits -- rebuilding their capital base -- and keep floating rates from resetting, triggering massive new rounds of defaults on mortgages and similar.
The supposed inflationary effects simply do not exist in the real economy, a fact that the NYT article thankfully recognizes:
The huge sums of money that the Fed has injected are potentially inflationary as a recovery takes hold. Slack utilization, however, is an offset. With millions of people unemployed or underemployed, and factories operating well below capacity, there is plenty of room, in theory at least, to step up output and avoid inflationary shortages as demand rises.Too much capacity, too little demand -- this is a worldwide problem and unlikely to end soon.
What the article misses is the potential for new asset bubbles as the money chases a better return than T bills. Every time the players feel a bit safe from systemic implosion, they start selling T bills chasing yield. Yet the supposed economic recovery simply isn' there in the real economy. Depending on how you read it, things have either bottomed or are getting worse much more slowly.
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