In the very short run it might even sell government securities, but open market sales and money shrinkage would be too harsh a medicine to go on for very long.
Because hedge funds are unregulated, managers are free to sellshort, use leverage, and invest in illiquid securities--activities not open to mutual-fund managers.
Hard-to-sell long-term securities had been bought with short-lived debt, which left borrowers vulnerable to a change in sentiment every time the debt fell due.