The main reason is that to do that, the Fed bought $630 billion in treasury bonds from the banks and stored that in their reserve accounts rather than the cash that was there before.
The bailout is a swap of cash for bad assets, as opposed to swapping cash for good assets.
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Date: 2008-10-02 04:53 pm (UTC)The bailout is a swap of cash for bad assets, as opposed to swapping cash for good assets.