* The government buying it back (by paying down the debt) takes that quasi-cash out of circulation, deflating the money supply. * We aren't talking about payin

* The government buying it back (by paying down the debt) takes that quasi-cash out of circulation, deflating the money supply. * We aren't talking about paying down the debt. We are talking about borrowing less money this month than we did last month because we just sold our shares in Citibank and so we've got a few billion in cool cash lying around. The total debt continues to go up, just at a slower rate. From the credit market's point of view, the US govenment just sold a few billion less in bonds this month (as compared to last month) and so that means that the creditors have a few billion more to invest elsewhere.