Yesterday, the stock market imploded rather dramatically. And, as all sorts of people became concerned about the market, and liquidity, the Fed injected $50 billion into the markets. On top of that, the Fed is injecting another $50 billion in order to continue the liquidity.

Unfortunately, one of the natural consequences of a greater money supply is inflation. The results of yesterday’s plummet could be higher inflation, which is likely to affect your personal finances in very real ways — especially in terms of your household budget.

Increased liquidity for banks

On the other hand, though, it is hoped that this increased liquidity will help banks feel more secure about lending to each other. Because the last thing the mortgage market needs is tighter credit and banks unwilling to lend.