It seems like there is a lot of contradiction in how the Fed/Gov are trying to restore the Banking system. On the one side they are telling banks to keep more cash in reserve. (This is a worldwide phenomena). On the other side they are asking them to ease credit a complete contradiction to keeping more reserve. At the moment, banks are building up stock with cheap money from the Fed (at least that what I think they are doing) and credit should ease once they do so (as I believe it is doing currently). Inflation in this scheme would not be a factor because the money is being soaked up by banks as reserve.
At least this is what I'm getting from all the CNBC/Bloomberg watching ;p
Comments
It seems like there is a lot of contradiction in how the Fed/Gov are trying to restore the Banking system. On the one side they are telling banks to keep more cash in reserve. (This is a worldwide phenomena). On the other side they are asking them to ease credit a complete contradiction to keeping more reserve. At the moment, banks are building up stock with cheap money from the Fed (at least that what I think they are doing) and credit should ease once they do so (as I believe it is doing currently). Inflation in this scheme would not be a factor because the money is being soaked up by banks as reserve.
At least this is what I'm getting from all the CNBC/Bloomberg watching ;p
Given credit isn't the only thing that affects the reserve amount. For example, the bank buying securities themselves.