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To: Oblomov who wrote (7782)	8/16/1999 9:50:00 AM
From: Investor2	Read Replies (1) \| Respond to of 15132

RE: "In fact, a 'trade deficit' is just another way of saying that money is flowing into our economy from foreign sources." If US companies and citizens buy more foreign goods then we sell, US has a trade deficit. If US companies and citizens buy more foreign goods then we sell, we are sending more cash abroad and receiving more goods/services in return. So why does a trade deficit mean that more money is flowing into our economy? It seems the reverse is true. Best wishes, I2

To: Oblomov who wrote (7782)	8/16/1999 10:21:00 PM
From: JF Quinnelly	Read Replies (1) \| Respond to of 15132

Foreign capital flows are really irrelevant to whether or not the of retiring Treasury debt will shrink the money supply. My point is that Treasuries are part of the US monetary base. This information is usually found in any description of M1, M2, and M3, such as that printed weekly in Barrons. Or it can be found in Fed literature Retiring T bonds won't shrink the money supply. It simply converts that part of the monetary base from Treasury instruments into currency.