New money flowing into the eight categories that we follow under the rubric “fund managers” reached $287.4 billion in Q2 2004.

Of this amount, about 41% was represented by sales of mutual fund shares. To put this in perspective, all domestic savings entering the market through these institutional channels did not amount to even half the savings flowing to the U.S. from overseas, mostly as a result of the trade deficit.

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In the second quarter of 2004, the primary source of funds for American households came from borrowing through home mortgages.

Part of this money went to buy real estate, but a large portion went into consumer durables and household spending. There was a 49.9% increase in spending on residential real estate and a 14.1% increase in outlays for consumer durables, as compared to the year 2000.

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Net issues of mutual fund shares in the second quarter of 2004 were $118.7 billion. Net issues of mutual fund shares were down from the annual average of $215.2 billion during the last years of the Great Bubble (1999-2000), and the annual average of $282.0 billion during the post-Bubble years (2001 through Q1 of 2004).

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