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To: Sarmad Y. Hermiz who wrote (39953)	2/14/1999 12:29:00 AM
From: GST	Read Replies (1) \| Respond to of 164684

Sarmad--Oh yes, the fed could wash the sale-- but why? Lets see -- scenario (a) AG sees the Japanese sell bonds, long rates go up in the US. The economy slows. AG does not take any heat for spoiling the party. Scenario (b) The Japanese sell US bonds, and AG doubles the rate of money supply growth to wash the sale -- lets say he shifts money supply growth from 10 percent to 20 percent. Oh ya, nobody would notice that! And we get to keep our bubble -- just what AG has been dreaming of -- Sarmad -- why wash the sale when you can use it to pop the bubble, dry up liquidity and cool off the economy? Nope, the real problem is this -- how does Japan fix its economy with massive public spending? AG has to worry about Japan triggering a global recession -- or worse.