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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Earlie who wrote (31191)	8/16/1998 7:29:00 PM
From: Earlie	Read Replies (3) \| Respond to of 132070

To Earlie from Earlie: Not that I wish to berate an aged topic, but the two largest holders of U.S. treasuries, Japan and the U.K., have sold off $60.0 billion over the last few months. That represents 10% of their total holdings, a not inconsiderable percentage. Those holdings were not sold into the open market (far too visible and dangerous), nor acquired by the Fed as "assets" (ditto above). The only other way this could have been accomplished is through the "monetizing" of the debt, i.e. via the Fed's printing presses. This dovetails nicely with the rise in the U.S. money supply numbers, both in amount and timing. Incidentally, while I wish I could so claim, this is not my effort, although I admire the work of the researcher behind these findings. This unobtrusive dispatching of treasuries is nice work if it can be pulled off without rousing the neighbourhood dogs, or other substantial treasury holders, but there are two problems nevertheless. - Others, should they learn of it, can be expected to follow suit, (not wishing to be left holding a rapidly depreciating paper asset). - the world is then even more awash in greenbacks, which if history is a guide, would cause the purchasing power of all circulating bucks to decline. Most central banks consider inflation as far less dangerous than deflation, so there is no question as to how the Fed should be expected to respond. Nor should we be surprised to discover that Rubin and Greenspan will use any means available to protect the bond market, given its size and importance. Heaven help us if this is a harbinger of future events,.....which seems a given at this end. Best, Earlie