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

To: Lee Lichterman III who wrote (36289)	12/30/1999 3:37:00 PM
From: KyrosL	Read Replies (1) \| Respond to of 99985

Lee, I think you are confusing the Treasury and the Fed. The Fed is the one that does repos and other actions that regulate the money supply. The Treasury manages US Government debt. In early January $27.5 Billion of US Government debt matures. So, the Treasury will issue $25 Billion of new debt to cover the maturing debt. Since the newly issued debt is $2.5 Billion less than the maturing debt, $2.5 Billion of US Government debt is being paid down. In other words there will be $2.5 Billion fewer Treasury debt securities outstanding. The Fed has nothing to do with Treasury debt issuance. It simply buys Government debt in the open market, whenever it wants to inject money into the economy and sells whenever it wants to reduce the money supply. Repos are Fed operations whereby the Fed temporarily injects money by buying Treasury bills and selling them back within a fixed time period, which results in a net zero money supply change.