What would happen to the U.S. economy if all its commercial banks suddenly closed their doors? Throughout most of American history, the answer would have been a disaster of epic proportions, akin to the Depression wrought by the chain-reaction bank failures in the early 1930s. But in 1993 the startling answer is that a shutdown by banks might be far from cataclysmic.
Consider this: though the economic recovery is now 27 months old, not a single net new dollar has been lent to business by banks in all that time. Last week the Federal Reserve reported that the amount of loans...
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