Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: pogohere who wrote (101036)	8/20/2009 3:42:43 AM
From: Real Man	Read Replies (1) of 116555

The Fed can tighten by increasing reserve requirements, or by creating insentives like that for banks to do so. They tightened in the midst of a crisis, causing the crash. Period. They did so because they ran out of balance sheet. The effect was that of a reverse coupon pass, sucking the money into the printing press. Was that intensional or a screw up? I don't know. They wanted to shore up the dollar, which entered uncontrollable slide once they started easing. I guess, tightening the usual way would create political fallout. Naturally, the dollar shot up.

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