Posted on 12/27/2005 6:20:46 AM PST by hubbubhubbub
Over the past few days, December 21st — when our first Hindenburg Omen (of whatever cluster is coming) — and Thursday December 22nd, the Federal Reserve has conducted one of the largest two-day Repo injections of money into the system since back in September 2001. On Wednesday they added $18.0 billion in reserves and on Thursday they added another $20.0 billion. Is this a coincidence, coming right as we get another Hindenburg Omen? Probably not. Is something high-risk going on behind the scenes here? Let’s review some facts at the Fed. On November 10th, 2005, shortly after appointing Bernanke to replace Greenbackspan, the Fed mysteriously announced with little comment and no palatable justification that they will hide M-3 effective March 2006. M-3 has been the main staple of money supply measurement and transparent disclosure since the Fed was founded back in 1913. It is the key monetary aggregate that includes Fed Repo transactions, that mechanism whereby the Fed increases reserves. The date when M-3 will start being hidden also happens to be the exact month that Iran will declare economic war against the U.S. Dollar by trading its oil in Petro-Euros on its new bourse. But there is more. The Federal Reserve currently has three vacancies within the 19 top Regional Bank and Board of Governor spots. Why? Part of ongoing wholesale resignations.
The latest is from the Philly Fed. Fed President and Open Market Committee member Anthony Santomero has announced his resignation after only a brief year and a half tenure. Very unusual. Hey, Fed Presidents are treated like gods. They have enormous power, prestige, and presence. Why quit? He is far from alone. Over the past few years no less than six Federal Reserve Regional Bank Presidents have resigned. This is highly unusual.
An immediate impact is that we are about to have a largely inexperienced batch of individuals conducting monetary policy in the United States. So of course, the first thing they will do is hide the key money figures. Two positions for the Board of Governors (there are 7)have been open for quite a while. Plus six of the 12 Regional Head spots have turned over during the past few years.
If a substantial amount of oil transactions will suddenly be conducted in Euros instead of Dollars, this should put pressure on the Dollar as folks exchange Dollars for Euros, jeopardizing the Dollar’s status as the world's reserve currency, making it more difficult to print all the dollars the Fed wants to without driving the Dollar into the ground. Iraq threatened to do what Iran has threatened to do just before we went in looking for weapons of mass disappearance. If the Dollar tanks, Treasuries might not be far behind. If Treasuries tank, kiss the Housing-driven boom goodbye. Could the Master Planners be hiding M-3 because they anticipate they may have to monetize the Federal debt, buy our own Treasury Bonds during the coming economic attack against the Dollar? That would require a ton of new fresh money creation — too much to disclose. Could it be some folks at the top of the Fed do not have the stomach to be part of what is about to go down?
M-3 has a direct but lagging impact on financial markets. Look at the chart. Whenever M-3 rises, the Dow Industrials rise. Whenever M-3 is flat or declines, the Dow Industrials decline. The Dow Industrials are a bellwether for the economy. If we can monitor M-3, we can better monitor the future path of equities and the economy. It is wrong for the Fed to stop its disclosure for this very reason. Investors need to know in a free market economy, because M-3 infusion is centrally planned intervention into a free market system. Investors need to know when the Master Planners have decided to intervene. Our buy/sell signals were designed to pick up the scent of Master Planner intervention by analyzing supply and demand forces underlying the markets. So with or without a fully disclosed M-3, we will be able to continue to identify coming multi-week trends.
So what about M-3 the past week? The latest figures show that on a seasonally adjusted basis, M-3 rose 27.3 billion last week, a 14.0 percent annualized clip, and is up $76 billion over the past month, a 9.8 percent growth rate. But those are the massaged numbers. For the raw figures, fasten your seat belt. Are you ready? M-3 was increased $58.7 billion last week (that does not include the huge Repo infusions noted above), a 30.0 percent annualized rate of growth. For the past two week, the Fed added $93.5 billion to the money supply, a 24.0 percent annual clip. Over the past 6 weeks it is up $192.9 billion, a 16.7 percent Banana Republic hyperinflationary pace. This is nuts, folks — unless there is an incredible risk out there we are not being told about. That is a lot of money for the Plunge Protection Team’s arsenal to buy markets — stocks, bonds, currencies, whatever. This level of irresponsible money supply growth makes shorting markets hazardous, yet at the same time says markets are at huge risk of declining. Maybe M-3 growth doesn’t stop the decline this time. Should be a fascinating storm in 2006.
The recent rise in Gold catalogued 74 points over about a month, a 16 percent rally from precisely the day the Fed announced it would hide M-3 from taxpayers and citizens of this great nation. That is no coincidence. Gold sees hyperinflation, monetization of debt, and intervention into free markets. Gold is telling us it expects Ben Bernanke to be an inflationist.
Don’t miss Dr. McHugh’s interview with CBS radio at WWJ 950 AM on December 30th, 2005. You can access this station through the internet by clicking on www.wwj.com . Jayne Bowers presents Dr. McHugh’s views on the Fed’s decision to drop M-3, the Plunge Protection Team, and new Fed Chairman Ben Bernanke.
“For a child will be born to us, a son will be given to us; And the government will rest on His shoulders; And His name will be called Wonderful Counselor, Mighty God, Eternal Father, Prince of Peace.” Isaiah 9:6
CONTACT INFORMATION Robert McHugh, Ph.D. Main Line Investors, Inc. TechnicalIndicatorIndex.com Kimberton, PA USA
It's worth noting that paper money only consitutes about 7% of all "money" that is on the books. So in times where there will be a lot of commerce, it stands to reason the Fed would boost the actual supply of dollars.
My head hurts.
The Inflationary/Deflationary camps are all over the map this morning.
Did you read Jas Jain's deflationary reckoning?
As I said, my head hurts.
"Seems to me common sense you would inject some money into the system before Christmas. Duh. Banks always need lots of cash on hand. "
Banks need $ for Christmas shopping every year? I am interested in your logic. Please explain?
Why do you declare the author a moonbat?
"Iraq threatened to do what Iran has threatened to do just before we went in looking for weapons of mass disappearance."
Author shows himself to be a moonbat and thus he may be safely ignored.
No my friend, you have shown yourself to be a moonbat and will be ignored. Iraq was in fact peddling oil for Euros to France and Germany. That's why we're there now. WMD was just a pretext and a false one at that. If the dollar loses it's status as world reserve currency (i.e. every commodity traded worldwide is traded in $US) our way of life ceases.
Well, for one thing, it's a rabid Goldbug writing on a site for rabid Goldbugs...that's in-and-of itself evidence of Moonbatism.
They're not just people advocating that people invest some of their money in Gold as a good investment.
Goldbugs basically sell a fantasy of imminent complete economic collapse, and have been for decades, and they've been wrong over and over again.
Fans of these sites imagine setting themselves up as warlords with all the Krugerrands they've got stashed under their beds after complete anarchy and social breakdown sweep the country after "fiat money" becomes worthless.
Why do you ask me why I think the author is a moonbat when I posted the sentence that I think shows the author to be a moonbat right above my assertion? How much clearer do I have to be? Obviously the author is implying that we invaded Iraq, knowing full well that Iraq had no weapons of mass destruction, because what we were really concerned about was that Iraq was going to switch their oil economy from dollars to Euros. That is an ignorant, paranoid, moonbat position, as far as I am concerned and about as obvious as the nose on your face, but apparently it went straight over your head. Why do you think we went into Iraq? To protect the dollar?
The more they print, the more they devalue the dollar. Problem is, there is less actual money in our economy because of offshoring - it's now in other economic markets instead of the US. But the US is still consuming the products produced by jobs that used to be here. Free trade turned the US into a bake sale. The strength we built is being given away for donations to re-election campaigns. The fed is doing one of two things: trying to bail water with a seive, or speeding up our decline. The two approaches look a lot alike.
Took him awhile but eventually he got to his motivating rationale for this claptrap. To get you to buy gold to increase his profits.
As you see in posts 7 and 9, the Goldbugs have allies in Moonbatism in Buchananite protectionist twits; which is why it always cracks me up when good economic news is posted and people start posting how the Democrats are "deeply saddened"...there's quite a large contingent of "conservatives" who are always frustrated by good economic news and are disappointed day after day when the economy doesn't collapse as they're hoping.
Gold is money and has been for thousands of years.
Paper dollars can be printed at the whim of the government.
It is not moonbatism to put a percentage of one's assets in gold.
And why is that? Because regulations are so stifling here that the cost to do business is much less elsewhere. That, and not "free trade," is the origin of the bake sale. If you do not support free trade, what do you support? Central planning?
Sooner or later they will be right of course.
I don't think so. They're not dealers, and I rather suspect they're buying, not selling, right now.
Our current way of life is unsustainable. These interest only mortgages to buy houses with two car garages filled with Asian cars, having tanks of imported fuel to get to the store so we can buy more Chinese furniture and clothing, while the southern border hemmorages with an influx of benefit glomming illegals........
Add in the numerous people with the entitlement mentality, who have been raised on food stamps and housing assistance, have zero job skills and still expect the government to pay for their bad choices (ie living below sea level, never marrying while having five kids, etc.) and the current good times cannot last long.
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