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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: pogohere who wrote (101023)	8/19/2009 6:21:25 PM
From: Real Man	Read Replies (1) \| Respond to of 116555

There sure was a credit bubble and a credit crash. The Fed did not print until December 2008. In September 2008 they started paying interest on reserves, so 1 Trillion of cash piled up at the Fed, inducing VERY SEVERE TIGHTENING of credit. This act, perhaps, caused the crash, among other things, cause the CDS issue for FNM/FRE and LEH proved to be not too severe. If you want an analogy, by starting paying interest on reserves above T-bill rates, the Fed sucked in close to 1 trillion from the economy, essentially performing a reverse printing operation of that size and causing the crash.