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To: JMD who wrote (13206)	8/1/1998 11:32:00 PM
From: DaveMG	Read Replies (1) \| Respond to of 152472

JMD, Maurice, Gregg,Jon C.,Mozek, Renby have I forgotten anyone? Thanks for all those great posts conerning money supply which have left me more confused than ever. I just spent a f...ing hour crafting a deliberate bunch of speculations and questions which my Gdamned MSIE4.0 just ate so here's a very condensed version. Mike. How are these SuperD's distributed? Does David R. call Alan and ask for a few bil, subject of course to a little scrutiny of Chases books? It seems that money supply follows asset values because those assets are the collateral against which money is loaned.If no more money were produced pretty soon those asset values would stop rising no? The Fed simply tinkers around the edges with reserve requirements, margin requirements,repurchases etc., controlling the rate at which supply increases/decreases relative to asset values. Maurice, Congress doesn't just go over to a special ATM at Treasury and withdraw those SuperD's. They have to go around hat in hand. On of the reasons money is easier to come by is because they're not borrowing as much, thanks to the virtuous circle of borrowed money, rising asset values etc. Renby, I certainly can corroborate your experience. Money is easy and cheap to come by compared with the eighties Our COOP refinanced, we're saving 25% on our monthly maintenance. My loft has more than doubled in "value" in the last ten yrs, I can borrow against that increase in "value", stick it into my brokerage acct, margin that, margin the increase in value to my portfolio because of the mkt rise..on and on. What happens when asset values leap around? If Lu signs a contract in Botswana worth 30 mil and the stock gaps up 5$ for a mkt cap increase of 6.5 bil, how has this money been created.Is this the future discounting of the cash flow to be generated by the 30 mil contract? If there's a mkt selloff,gap down, or a real estate crash, where does this money go? After all, it existed when the original purchases were made, or is it that only a fraction of it really existed and the rest was leverage, hot air, a House of Cards? Mqurice, Sometimes things happen BECAUSE people are waiting for them. The Incas and Astecs were waiting for white fourlegged Gods from the East who would bring the end of their Empires. Pisarro conquered the Incas with an army of 200 pitted against a nation of millions. It's true the Spaniards had firepower, horses, and were ruthhless, nontheless without this Myth, it's my impression they would not have succeeded. How much margin debt is there? Nobody knows, just as nobody has tallied the total value of derivative contracts. This leverage clearly can cascade in both directions. FAITH is the Rub. Do You, ie all of you,mkt participants, have the FAITH to sit tight when things look really bad, which they might, because after reading all these posts it's pretty clear that we're skating on thin ice, that we don't really understand what's going on. I suppose it's a bet on how bad one thinks things can get, whether a selloff would be bad enough that it would be worth paying taxes now and be done with it. GREED and FAITH. CONFUSION. On the other hand.... Glad to be of help.. Dave