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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 21 4:00 PM EST

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To: HairBall who wrote (24553)	9/2/1999 1:42:00 PM
From: Matthew L. Jones	Read Replies (1) of 99985

LG, The selling of securities is how the government takes liquidity out of the market. It is another way of tightening. When the government buys securities it is doing it by "printing" more money, which in turn adds to the money supply. I know it sounds bassakwards but if you think about it, that is what happens. So, the buying of securities is another way of tightening (although less transparent) by reducing money supply and trying to ward of inflation (which doesn't exist). BTW, where did you find out that they are selling securities and reducing the money supply? Matt

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