Remember the credit crunch? Of course, you do. We’d never seen anything like it, or so the highest financial authorities and their lapdogs in the news media told us—not in a cool, calm, and collected way, either, but in a breathless delivery that suggested imminent economic doom unless the government immediately undertook to “do something”. Which it did, of course, on a scale never before witnessed in U.S. history.

Probably the most important measure of credit-market conditions is the amount of commercial-bank credit outstanding. These figures show that although the middle part of 2008 does stand out in the long view, it does so not by virtue of credit’s frightening contraction, but only by virtue of its hitting a six-month plateau from April through September.

At no time during that interval, however, did the amount of commercial-bank credit outstanding fall below the amount outstanding at the beginning of the year. In short, credit was actually ample, indeed, at an all-time high; it simply stopped growing as usual for six months, stuck at about $9.4 trillion, while one Wall Streeter after another told NPR that “no money is moving; the credit market is completely shut down” or some such cock-and-bull story.

Continue Reading Robert Higgs of the Independent Institute