Why did the central banks need to inject money?

Why did the central banks need to inject money into 'the money supply' as a result of the global drop in share prices? Surely the amount of currency in circulation - ie the sum of all the amounts deposited in banks and cash in people's pockets - is not affected by share prices. Individuals and companies owning shares will not obtain as much by liquidating those assets, but buying/selling shares (or anything else) is a zero sum transaction - the total of commission charges, fees, tax etc and the amount gained by the seller is equal to the amount paid by the buyer.

Reply to
Graham Murray
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Quite simple really. The banks are afraid of lending to each other. They are hoarding money.

So really for "central banks need to inject money" read "central banks are prepared to lend to commercial banks", thus oiling the wheels of the banking system.

Reply to
John

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