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Iowa State University economist Meghan O’Brien sees a specter hovering over the U.S. economy.

“There isn’t an issue of there being no money to lend,” she said. “There is an issue of not being able to lend it. That in my mind is a disturbing phenomenon.”

O’Brien maintains that U.S. banks are holding roughly $900 billion in reserves against loan losses. Some government data suggests that even that amount might not be enough to cover credit losses.

But O’Brien said it is a shocking amount that, if pumped into the economy all at once, could cause runaway inflation.

“For the first time in history, reserves and what the banks are required to hold are so far out of whack that it’s scary,” she said.

O’Brien believes that banks are hoarding money in part because of increased scrutiny of lending practices after the collapse of financial markets that resulted from questionable loans and the complicated financial instruments that secured them.

“Because banks aren’t lending this money anyway, they need to control the timing of the release of it,” she said.

The potential for harm to the economy could be diluted if reserve requirements were raised to a higher level, effectively eliminating the possibility that the money could be dumped into the economy, she said.

O’Brien said another consequence of tight credit markets is that banks are reducing credit lines that they had previously agreed to. For example, they might reduce a $500,000 line of credit to $100,000 for a reliable business customer.

“It’s a real problem,” she said.