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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Larry S. who wrote (64629)6/26/2006 10:23:34 PM
From: benwood  Read Replies (2) of 110194
 
It *is* their purchases, esp. in prior years, that has subsidized our federal shortfall. But the dollars they are using to buy treasuries for the most part have come from the trading imbalance. The trade imbalance accumulates and becomes a problem for them... without the accumulation of the dollars from trading imbalances, they wouldn't bite off on buying Treasuries unless they were cheaper (e.g. higher interest rates).

Does that make sense? Maybe Russ could weigh in -- he's the one who's done so much to explain this concept, and I hope I'm explaining it correctly.
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