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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Liatris Spicata who wrote (8625)	5/30/1999 7:55:00 PM
From: nihil	Respond to of 9980

If foreign investors suddenly took their money and ran, they would have lots of U.S. money which they could spend or invest anywhere dollars were any good. To create demand for the surplus treasuries, the federal reserve system could engage in open market operations. In other words -- foreigners would hold more cash and less securities, and the FRB's would hold more securities and less cash. The federal government would pay out less interest on the debt (since the USGovt get the above standard profits of the FRB's.) A trade deficit is far less serious for the United States than for any other country. The U.S. trade deficit is the source of much of the growth in world liquidity. If the U.S. ever attained a balance in trade, someone else (IMF, Japan?) would have to provide the liquidity needed for growth.