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To: Ilaine who wrote (51)	3/23/2001 1:21:53 AM
From: JF Quinnelly	Respond to of 443

The understanding I am struggling for is how much of the decline in total market cap has to do with the process you just described and how much it has to do with cash being taken out to the system. Money can't really "leave the system". At most it can change form slightly.(you will get a better idea of how to account for money balances by nosing around in the Friedman and Schwartz book). Credit, on the other hand, can evaporate. The monetary base is essentially cash, checking and savings deposits, money market accounts, and lastly Treasury Notes, Bills and Bonds. Money has to be held in one of these ways to be counted as money (and Treasury paper really doesn't function as a unit of exchange, but I digress). You could get an idea of how much of that market cap wealth is being captured by looking at cash and deposit account balances, M1 and M2 I suppose. If the market cap isn't simply evaporating it has to show up in the monetary accounts, as savings, checking, money market balances, something of that sort. Since the Ms, M1 M2 M3, don't expand all that quickly I suspect a lot of that market cap is simply going into the monetary Black Hole never to be seen again.