Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (72699)	12/23/2007 4:55:42 PM
From: Steve Lokness	Read Replies (1) of 116555

Mish; Money supply does not increase by money coming home nor is it guaranteed to be a bullish thing if it happens. How can you say that dollars coming here from overseas would not increase the money supply? Our money supply surely doesn't include the money held overseas in foreign accounts - does it? Doesn't matter though if it does because the money held in foreign places is NOT used in the purchase or exchange of goods on an every day basis here. If because of huge trade deficits Americans are buying more from overseas than we are selling to them - money is flowing from America to China or Dubai or even to Iraq for that matter. If these countries holding dollars then decide to buy up American companies - doesn't that money suddenly end up in the hands of shareholders? Shareholders then have the choice to go out and spend the money on new trinkets or any of the myriad choices that anyone with dollars has. But in any case why isn't it new dollars in the hands of Americans? If nothing else, it most surely would increase the velocity of money from sitting in some long term instrument to being doled out to shareholders. steve

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