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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Henry Volquardsen who wrote (1792)6/16/1999 3:13:00 PM
From: Freedom Fighter  Read Replies (1) of 3536
 
Henry,

I have two questions about capital flows. I may not be explaining them clearly but I hope it's good enough that you can answer.

Suppose foreign investors in aggregate want to own the USD (assets) in larger quantities than the current account deficit puts in their hands. Is this accomplished in some way by U.S. banks accumulating foreign currency deposits and giving them dollars in exchange?

Second, could this process increase the money supply in some way as the banks have to come up with the dollars?

Wayne
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