Where is all this alleged currency hoarding? Who's sitting on piles of cash? The rich certainly aren't. Does anybody really think that rich people keep vaults full of cash? They keep their money in stocks, bonds, and real estate.
The only people who do hoard actual cash are the poor and unsophisticated, who are often unable to take advantage of banking services.
The only other significant chunk of hoarding going on right now is actually being perpetrated by The Fed itself. They created vast quantities of new money in 2008 and gave it to the banks to patch up their balance sheets. The Fed is paying good interest on that money so the banks will keep it on deposit with The Fed instead of loaning it into the economy -- because that would obviously spark a firestorm of inflation.
Basically, there are two different circuits of money: central bank money (aka reserves), which is what the banks have in their accounts at the Fed, and regular money, which is what you and I have in our bank accounts.
Those circuits never cross. The money in a central bank account can never move into a regular bank deposit, and vice versa.
Therefore, the banks are actually incapable of loaning out all that money that they have, because the design literally doesn't allow it. To talk about their willingness to loan that money out is completely nonsensical.
What banks actually do when they give a loan to a non-bank is that they simply create a deposit for that entity, which means they create money out of thin air by adding an appropriate entry to their accounting system.
The system as is actually makes a lot of sense. It is a very logical design, which becomes very clear when you really trace where money shows up on balance sheets. The first circuit is central bank liabilities/bank assets, the second circuit is bank liabilities/non-bank assets. It's no wonder they can't cross.
Unfortunately, we don't learn such things at school, so pretty much everything you read about the monetary system in the media is an incoherent and illogical mess.
I think you are missing the positive sides of money-hoarding. Whenever someone doesn't spend the money that person has earned, she saves resources for someone else to use (because she doesn't consume them). This increases the availability of resources in an economy, arguably a good thing, right?
Where is all this alleged currency hoarding? Who's sitting on piles of cash? The rich certainly aren't. Does anybody really think that rich people keep vaults full of cash? They keep their money in stocks, bonds, and real estate.
The only people who do hoard actual cash are the poor and unsophisticated, who are often unable to take advantage of banking services.
The only other significant chunk of hoarding going on right now is actually being perpetrated by The Fed itself. They created vast quantities of new money in 2008 and gave it to the banks to patch up their balance sheets. The Fed is paying good interest on that money so the banks will keep it on deposit with The Fed instead of loaning it into the economy -- because that would obviously spark a firestorm of inflation.