Skip to comments.Unpleasant Trend - Fed Counters By Stopping Release of M3 Money Supply Data
Posted on 02/28/2006 7:41:17 AM PST by vrwc0915
At a time when money supply (link to Wikipedia) has been exploding and weekly figures provide a nasty experience week after week, month after month, the Fed put out a short, flat notice last Thursday, saying that it will discontinue publication of M3 figures after March 2006. Such a step may fit in the policy of the current Bush administration but certainly not a supposedly independent central bank. M3 is the most important money aggregate for economists, analysts and Fed watchers to get an idea at what speed the (electronic) printing press is running. The European Central Bank (ECB) honors this set of data with a special press release every month. So much about transparency.
GRAPH: Recent M3 figures are certainly unpleasant and worrisome. M3 has been growing at an annual rate of 7.5 percent or double the most recent rate of GDP growth (subject to a revision.) Since Bush took office money supply M3 has risen by 40%. The Fed prints it and the government spends it as can be seen by growing government participation in growth numbers.
I am still shocked and in a state of disbelief that gives place to being disgusted about the new style. What will be next? Discontinuation of industrial production figures below zero? The consumer price index (CPI) being treated as a national secret once it rises above 5% despite all hedonic adjustments? Torture threats against people insisting to get the whole picture?
US Investing Will Become A Fly By Night Adventure No! First comes the discontinuation of more important data releases. No more repo data, no more Eurodollar data, no more large time deposits. Investing will become a fly by night adventure. From the Fed website (saved locally for later reference):
On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate. The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars. The Board will continue to publish institutional money market mutual funds as a memorandum item in this release. Measures of large-denomination time deposits will continue to be published by the Board in the Flow of Funds Accounts (Z.1 release) on a quarterly basis and in the H.8 release on a weekly basis (for commercial banks).
Take note that only publication, but not calculation of these figures will be discontinued. I strongly hope that Ben Bernanke will revise this decision, being an economist who knows that sound research can only be done on the basis of data.
Looking back into history economic data was only kept a secret in failing economies, e.g. the Soviet Union. As this data is published by the board of governors of the Fed every one of their words will have to be scrutinized most carefully in the future and tested for credibility. Words are easy, but I prefer hard data. No prudent investor will navigate his funds through a foggy world but lie at anchor below a clear sky, meaning: elsewhere.
Rounding up Keynesians and shipping them to Gitmo.
Americans always overreact.......bankrupting the country.
Future wars will be fought from home ........push the nuke button.
"Looks likes the terrorists are winning. Americans always overreact.......bankrupting the country. Future wars will be fought from home ........push the nuke button. "
Did you forget to tell everyone to buy gold?
Who is the author?
Buy SPAM, more likely.
It's as crystal clear as your tag line.
Key question. Where is "elsewhere?" The US economy is the best bet in the world, which is why we can have so much debt at so low interest. Yes, we've been spending like slightly inebriated sailors, but it turns out the Europeans and the Japanese have been spending like drunken sailors and have far less in the way of GDP growth to show for it. You could go to China or India in search of growth, but if you are looking for monetary stability, forget about it. You have to come right back here. Which is why we have no trouble auctioning off government debt by the trillions to foreign investors.
If you would prefer that your country's investments were less attractive to foreign capital, you could always move to Europe or Canada. The world is betting AGAINST them. I don't see any great advantage, given their double-digit unemployment and 50% GDP in government spending.
The prudent thing now is what it has always been. Diversify. Don't own cash, except what you need for your short-term needs. Own some bonds, some stock, some real estate, some gold, some investment-grade antiques. And avoid debt for anything except the acquisition of appreciating assets with positive cash flows. Then sleep well as the alarmists keep publishing the same tired charts they've been publishing for decades.
Remember, up until now every optimist in history has been right. Now place your bets.
Face it, NOBODY knows "easing the money market" like Helicopter Ben, the Printing Press Man!
No, thousands of years of hard economic reality are now making that case plainly enough.
The current ratio is now under 20. A blind man can spot what is coming next.
It's not time yet.
It's coming, but not yet. A few more pieces to put in place.
Make hay while the sun shines.
Fear, Complexity, & Environmental Management in the 21st Century
Culture of Fear
Reason ^ | February 17, 2006 | Ronald Bailey
Posted on 02/20/2006 2:08:56 PM EST by neverdem
Will it be available from other sources?
Not releasing M3 on the excuse that no one uses it is a false statement. Many people use it. The feds just stopped using it because it makes the financial situation look bad.
This reminds me of Soviet statistics.
Secrecy is the killer of nations.
I have to tell you that as a financial professional and an MBA, I am not impressed with that blog, "The Prudent Investor." Anyone can start a blog these days, but that doesn't mean they know what they're talking about.
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