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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (3871)	12/25/2003 2:08:15 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

<Plunger:These guys haven't heard of foreign EXCANHGE? So what happens to the dollars that are sold? They don't belong to the buyer? They went up in smoke?> The dollars just end up abroad in foreign institutions (loosely called Eurodollars, perhaps a better term now would be "Asiadollars").The Ms only measure money and deposits available in the domestic system. <Plunger:So Minyanville think that the treasury don't spend and recycle the cash they get from issuing bonds?> Something Plunger fails to mention is that a bunch of interest is mounting up on this issuance, as we are quickly approaching the 50% mark on foreign ownership of tradable treasuries. Those payments are going overseas and out of the domestic system. The other big buyer of treasuries is the Social Security system, and interest needs to accumulate in the Trust to pay future claims. That leaves the Ms banking system too. Another straightforward explanation for disappearing money is negative investment flow caused by the dearth of American savings. And why should Americans save, given that short term rates are under one percent?