The Surplus's effect on money supply

[Ian Murray]

> 
> OK, but this is what I don't understand: the mechanism
> by which the Fed is supposed to inject or withdraw
> money into the system is by buying and selling
> treasury securities.  But if the Treasury itself is
> running a surplus, isn't the supply of securities (and
> thus of money) going to decrease no matter what the
> Fed does?  I guess I just don't understand the
> relationship between the Fed and the Treasury...
> 
> Jim Baird 
========
And that's the way they'd like to keep it.

Ian