_________ The CPI, many gold bugs believe, is not to be trusted. A real gauge of inflation, they argue, is M3, which is the largest measure of the money supply. And guess what? That weekly measure, which used to rock the bond and stock markets in the 1970s, is about to be scrapped on March 23.
The explanation on the Fed's Web site reads: "M3 does not appear to convey any additional information about economic activity that is not already embodied in M2 and has not played a role in the monetary policy process for many years. Consequently, the Board judged that the costs of collecting the underlying data and publishing M3 outweigh the benefits."
If you ask gold bugs, however, the Fed is trying to hide something. M3 includes the smaller measures of the money supply such as M1 and M2 plus large time deposits, institutional money market accounts, and Eurodollar deposits of U.S. banks held at foreign branches and at all U.S. offices. While the first two measures are mostly held by the public, M3 is about putting "money into the system," writes David Chapman, director of the Millennium Bullion Fund.
The first leg of today's inflationary environment, he says, started when former Fed Chairman Alan Greenspan cut rates in the early 1990s to stave off a recessionary environment, Chapman says. The latest leg came after the Fed cut rates to historical lows after the bursting of the tech bubble and the 9/11 attacks. Since 1995, M1 has risen 18.8%, M2 is up 89.5%, and M3 has increased a stunning 130%, Chapman notes.
"The Fed has been running a well managed hyperinflationary environment," says John Strafford, a gold analyst and editor of The Strafford Newsletter. "They must inflate or die."
But why remove M3 now?
Iran was expected to launch an exchange next week to start trading it oil in euros instead of dollars. Given current geopolitical tensions, a possible huge rush out of dollars would occur, and that would have hit M3 the most. A sharp drop in M3 has typically been seen as presaging recession, and markets would have panicked, says Chapman.
Gold is a long-term must buy. With the massive debt of the US government (and its citizenry), inflation will eventually have to be used as a way out.
And I do mean when.
perhaps. at the moment, it looks like more of a bounce.
And I can hardly believe the "quoted" in the article is suggesting that "hyperinflation" has been running throughout the past while. ROFLMAO. Were this so, we'd be seeing massive evidence of it, worldwide.. creeps and signposts. There's been ZERO. And you know the MSM like I know the MSM, they had nada to report on the markets; and so they focused on the nth dead soldier. Blah.
I'll tell ya what's hyperinflated: The liberal MSM.
They call $1 a rally. But wait! Why a rally at all for something that is only going up, up, up?
Huh, what? Huh, what? If gold rises, then it takes MORE money to buy the metal, not less. Hey, writer!
I need to book mark this so I can read it again later.
Do you have a link directly to this?