What did the Fed say or do to cause the deleveraging?

You have to understand the relationship between the banks and the Fed. The Fed was created in 1913 by the banks to police the banks. That's like a group of inmates choosing another group of inmates to be the guards of the prison.

Greenspan and Clinton created the recent mess and Goldman and Co were good and long Oil when they announced the possibility of a super spike to $200. The reason they announced that is so they could exit their long position and get short against the general public.

If you want a detailed answer to your question read "Web of Debt," by Ellen Brown or "The Creature from Jekyll Island," by Edward Griffin. Both books are heavily biased but they are excellent reads for anyone who is interested in the formation and operations of the Fed.
 
The gov't nor the FED didn't pull off the greatest ripoff of main street and biggest bank robbery in the last century via subprime fraud CDO and sold overpriced worthless stocks of citigroup...it's still 90% of $50/share and dilution of 75%..

billions of investor capital vanished.

all the stolen money is now in foreign secret banks now.

as for develeraging,,the money was fake...there was no money in the shell game..the assets were worthless. so buying power of the hedge funds went down..it was all paper wealth. on paper;

it wasn't that long ago citigroup and goldman sachs risk bankruptcy an GM going into receivership.

it was OVERLEVERAGED AND FRAUD that bankrupted the banks.

why did the bank pull credit..the banks were insolvent. loan defaults.

by 2007 the writing was already in wall but the FED didn't want to admit it in public...the banks were insolvent from subprime fraud. they open the box and they saw sh###t balance sheets. worthless assets.

now the risk is US defaulting on it's debt...gov't debt is unsustainable...or force to slash the gov't beaucracy of end teh war it cannot afford...empires fall from bankruptcy.soldiers adn bullets and bombs cost money.

Quote from thriftybob:

Oil went to $140

Goldman came out with a $200 number

Gas prices were going to the moon

And then the deleveraging began...... And the crash.....

I assume the Fed said or did something in reaction to what was perceived as the beginnings of hyperinflation. But I don't recall them saying or doing anything. DOES ANYONE KNOW? OR HAVE A GOOD IDEA?

To be honest, I think there is a good chance we will see that commodities zooming situation again in the next year. It might be demand from the rest of the world or a desire from the rest of the world to exit dollar positions that drives it, but I think it could happen again. Gold smells it now. So does silver. Oil not yet, but maybe it will in the spring when demand typically rises.

And how will the Fed respond next time?

I bet they are more careful not to cause a wanton deleveraging again, after seeing the deflationary impulse that resulted last time.

I don't recall any overt Fed moves as per se, but yet all of a sudden all of the hedge funds were panicked out of EVERYTHING!

Why did the banks all pull the credit lines all of a sudden? Or better yet, what in the hell were they doing lending to hedge funds at all in the first place, with 20 or 30 to 1 leverage?

Odd... Why don't we read these kinds of discussions in the Fed meeting minutes?
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