The Fed has held interest rates at near-zero levels in the hope that it would spur lending. The graph below shows that the effect has been just the opposite.

A word about the graph. M1 consists of currency and the kind of deposits that can be used to write checks. M2 consists of M1 plus other deposits like savings deposits and time deposits. So subtracting M1 from M2 gives us roughly the amount of money available for lending. Sweeps are added to this because it represents money that is swept under the carpet, that is, out of both M1 and M2. The graph shows that the gap between this and total loans and leases made by commercial banks has actually increased after the lowering of interest rates.

The graph below shows the gap between loans and money available for lending as a percentage of money available for lending. The high figures for the period before 1980 are just an indication that the monetary data for the two periods are not comparable.