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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Real Man who wrote (101031)8/19/2009 8:48:04 PM
From: pogohere1 Recommendation  Read Replies (3) of 116555
 
Me: "You mean the banks had a Trillion bucks that they couldn't find a reasonable return on, so they decided to keep it in reserves with the Fed ?"

You: "No"

"so banks naturally piled up [reserves with the Fed]"

So the banks had the bucks and kept it at the Fed because of the "higher than market risk free rates"? Did I get that right?

You: "The effect was major tightening in the midst of a financial crisis."

If the banks were otherwise solvent and had 1 Trillion to deposit with the Fed to earn "higher than market risk free rates", what was the nature of the crisis being addressed by the Fed? The answer to this question will allow me to understand your analysis of what you understand to have happened and to understand your general view of what I can do as an investor to protect myself from what you see coming. TIA
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