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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Casaubon who wrote (35759)	12/22/1999 1:17:00 PM
From: jttmab	Respond to of 99985

Casaubon, hmmmmmmm. I thought the Fed was the institution which had engineered the credit expansion; the well spring from which all credit arose. I had thought that is what the expansion of the money supply implied. This may at least help me with my fuzzy understanding of the Fed. As rates move down there is more incentive to borrow funds. Money supply is different. The fed can change money supply by buying or selling T-Bills, which are in effect a debt instrument of the government for the deficit/debt. If the government is operating at a surplus as it is now, I think the Fed is "obligated" to sell treasuries to some extent [though I'm not very clear on this point on the specifics]. jttmab