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The bank isn't sitting on a giant pile of money.

I thought banks were sitting on giant piles of money (thanks to the Fed), hence the low interest rates?

In a sense, yes, but that's mainly on the books and it depends on which interest rate you're referring to. You're right, much of the bailout money was used to cushion the capital accounts of these institutions. However, banks are businesses too and at the moment happen to be making tremendous profits, much of it due to the spreads they're getting on the low lending rate from the Feds.

Except that we're not having a capital shortage, we're having a demand shortage. There's plenty of money to be lent out, but there's no demand for it. So it really is the case that that money being spent is better than that money being saved.

I didn't say it had NO economic utility. I said it had very little. And it doesn't. Not compared to what it would if I'd actually be spending it.