[arcticbull]

> When you refer to the Fed's tools for reducing the money supply, do you mean the selling of financial assets?

Correct me if I'm wrong folks, but my understanding is the Fed controls the money supply through adjusting fractional reserve lending rates, benchmark interest rates, and through selling purchased assets (mostly T-bills).

The US economy is largely debt-driven, and increasing reserve rates means fewer loans are available to create. Increasing interest rates means loans are less attractive. Selling back bonds means that cash leaves circulation.