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 ?
(3) Robert Hetzel (2009, 2012) is one of the few Fed officials to consider the possibility that excessively tight money might have contributed to the Great Recession.
Herrick, Feinstein even formed its own mortgage banking company to alleviate the tight money crisis.
Krugman says this policy of tight national budgets and tight money supplies is folly, reminiscent of economic conditions in this country during the Hoover Administration, conditions which prolonged the Great Depression.
Echoing Lipton and Shafer from earlier sessions, she stressed the importance of tight money in turning confidence around.
This puts the Fed in the position of punishing "too high" stock prices with tight money, dangerous territory for monetary policy and the economy as whole.
Strouse seems to accept, without really supporting, Morgan's views that economic consolidation was necessary to promote efficiency; that centralization and de facto private regulation was required to calm overly turbulent markets; and that tight money (through maintenance of the gold standard) advanced U.S.
The rich generally benefit from tight money and low social spending.
Greenspan and the system in whose service he toils know that the economy has to run slow, with tight money and austerity in the interests of budget balancing, because that's the only way to keep wages down.
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.