Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: KyrosL who wrote (54890)	6/21/2000 8:34:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

KL, you are right in principle, but in practice what the treasury does is very much like the creation of money out of thin air. this is due to the fact that no true buyback occurs, but merely a shift of treasury debt from private hands to the social security trust fund. it's accounting sleight-of-hand. since the private hands are largely the banks holding the government paper, it is to them like a coupon pass - the difference is in principle only, effectively the banks liquid reserves increase, and thus the power to engage in fractional reserve credit creation. since the buybacks are not reversible from the banks PoV, it is a permanent liquidity injection. in the meantime the social security trust fund which is the source of the 'surplus' (it will be bust in 2030 i believe) holds IOU's instead of cash. i propose the treasury leave the SS fund alone - so as to give it a longer lease of life. the economy certainly doesn't require the additional stimulus. regards, hb