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To: Abner Hosmer who wrote (7550)	2/13/1998 4:41:00 AM
From: Bill Grant	Respond to of 116998

Tom, I agree that sales by the government of Japan can be "managed". I believe they have been selling US bonds since Nov-Dec 97, perhaps cooperating with US by selling gradually into the recent strength in the US bond market rather than precipitously. However, if the Japanese public is disinvesting, this may be a bigger problem for US. kitcomm.com Bill

To: Abner Hosmer who wrote (7550)	2/13/1998 9:27:00 PM
From: PaulM	Read Replies (2) \| Respond to of 116998

Hi Thomas. Thanks for the posts. U.S. M-3 grew at an 11.1% annual rate for the three months through Jan 1998 (M-2 at roughly 7.2% and M-1 at 4.1% during the same period.) This according to the Feds most recent money stock release. That means the Fed is buying treasuries. Maybe from the govt (monetizing the debt), maybe from American financial institutions (improving liquidity) but most likely primarily from the net selling Japanese. Not convinced that the market can now or in the future absorb this selling without the Fed. Particularly when we may see selling through the March 31 deadline much larger than we've seen so far. IMO the confidence-in-american assets story is partly true, but not the whole story. Interest rates are lower than they have been, but interest rates should be lower with the kind of money supply increases we're seeing (more dollars in hands of financial institutions means money is cheaper). The question of course is what interest rates will be when this money maeks its way through the economy and bond holders demand an inflation premium. Nothing new under the sun. Good Night.