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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 14 4:00 PM EST

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To: saket chadda who wrote (34715)	12/5/1999 1:44:00 AM
From: Lee Lichterman III	Read Replies (1) of 99985

Your point about just printing money is true but Bond repos do add liquidity/inject funds back into the economy. Way too complicated to write here so I will even give you the benefit of the doubt in this situation and point to it this way in a flat trade. I am the Govt. and sold you Bonds a long time ago for which you gave up cash. I do an early morning Bond repo so you get cash back plus interest. Now if you just sold your bond, are you going to buy another one? Doubtful, you will most likely turn around and buy stock intead, or a new car etc. Since those that sell bonds in these repos tend to be institutional investors, 99% goes right into the market within hours. Good Luck, Lee

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