tight money


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Tight money

When a restricted money supply makes credit difficult to secure. The antithesis of tight money is easy money.

Tight Money

A situation in which it is difficult to receive credit because of the monetary policy of the central bank. Tight money occurs when the central bank has enacted relatively high target interest rates. While this usually happens when the central bank is seeking to control or is concerned about inflation, tight money can negatively impact security prices and make it hard to receive a loan for a house or business.

tight money

A condition of the money supply in which credit is restricted and interest rates, consequently, are relatively high. Tight money generally has a negative effect on security prices, at least in the short run. Compare easy money.

tight money

or

dear money

a government policy whereby the CENTRAL BANK is authorized to sell government BONDS on the open market to facilitate a decrease in t he MONEY SUPPLY (see MONETARY POLICY).

The decrease in money supply serves to increase INTEREST RATES, which discourages INVESTMENT because previously profitable investments become unprofitable owing to the increased cost of borrowing (see MARGINAL EFFICIENCY OF CAPITAL

INVESTMENT).

Tight money policy, through MONEY SUPPLY/SPENDING LINKAGES, reduces AGGREGATE DEMAND. Contrast CHEAP MONEY.

References in periodicals archive ?
The actual widened gap between Canada and US rates in 1989 and after, McCracken accepts as prima facie evidence of a tight money policy.
Tight money strangles worldwide economic growth, he argues, unless international reserves increase in pace with trade.
Tight money, more conflict over goals, and a continued lack of clear methods to accomplish goals are some of the reasons cited for social agencies becoming more politicized.
In 1974, Mundell suggested the radical notion of combining tight money and tax cuts to halt the prevailing climate of inflation and recession.
He explained that libraries are undergoing many changes; tight money and low budgets have caused libraries to really focus on their purchases.
Because new construction or reorganization/renovation can be costly, it is not surprising that, in an era of tight money, academic, public, corporate, or governmental financial officers resist making any changes at all.
Located 100 miles north of Des Moines, Fort Dodge has a population of 26,000, a $23 million budget, and the usual range of problems, from sewers to garbage collection to tight money.
In the early years of the Plan the government followed a tight money policy and its efforts to reduce the budget deficit were targeted to ease the inflationary pressure-tightening resource constraints arising from inexorable growth of country's budgetary and current account deficits and resulting need to impose on IMF sponsored structural adjustment programme significantly restrained the country's economy and its growth performance.
The recession weeded out some of those developers, and tight money has those that remain thinking quality, McKeel says.
Tight money policies to keep the lid on inflation were exported from Germany to the rest of Europe via the exchange rate mechanism linking European Community (EC) currencies.
From the credit person's viewpoint, we are experiencing mergers and LBOs, tight money, and bank consolidations, to name a few.
Nationwide, tight money and rising car prices have increased the appeal of automobile leasing.