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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Real Man who wrote (101033)8/19/2009 10:53:57 PM
From: pogohere  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: "They piled up at the Fed because the Fed paid more than the
market. Period. It was automatic after that decision, and it caused the crash."

You: "Yes, I understand what happened, and the financial system
would completely collapse, were it not for the Fed."

Why would the banking system collapse without Fed action if the banking system had the unfettered ability to place $1 Trillion in reserve with the Fed at "higher than market risk free rates" ? Where did the banks get the $1 Trillion?
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