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.

Graham Murray wrote:
> 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. 
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.