NEW YORK ( TheStreet.com, RealMoney) --Much has been made of China's successful efforts to stimulate its economy through a massive and mandatory expansion of money and credit. Not only has China exploded its money supply by a whopping 28% (as economist Ed Yardeni has noted in recent days), that money has been put to use in the real economy. That has not been the case here in the U.S., where the money supply is increasing, but the velocity, or turnover of money, is not. M2, the most widely watched measure of the money supply, has grown about 9% year over year, while "money with zero maturity" (MZM) -- what economists call "high-powered money" -- has exploded.
In addition, the monetary base, another money measure, has grown to about $14 trillion. Assets of money market mutual funds total more than $3 trillion. Consumer savings are at a record dollar amount of $787 billion. But the cash sits idle on the sidelines as individuals and corporations squirrel it away for a rainy day that, in truth, has already come and gone. In fact, if they continue to hoard cash, they could very well bring the rain back again, an unwelcome development that is nonetheless a natural response to the economic trauma we all have lived through.
Wall Street would be best served not invoking Jesus to justify record bonuses. If bankers want to display true Christian values, they should keep their base pay and give their bonuses to the poor. That's what Jesus would do!