FED no more reporting M3

[beggars tomb]

Discontinuance of M3
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).

[HistoryStudent]

No wonder 30 years ago it was ONE TRILLION: now it's TEN TRILLION.

(probably leaving out another 50% - because the truth hurts)

Five years from now it'll be TWENTY TRILLION - and everything we have will be worth (less) by 50%!

[GREENSILVERHORN]

Looking more like China everyday around here.

[917601]

What this means according to the EU boys-"Apparently, the Fed would have us believe that they are now worried about the costs associated with reporting M3 money supply data.

Just for fun, here’s what the ECB [European Central Bank] had to say about M3, coincidentally, just this past week:

EUROPEAN Central Bank council member Nicholas Garganas said money supply growth is a "serious risk" to inflation and may tip the bank toward its first increase in interest rates in five years.

"There is no question that the recent acceleration of M3 growth poses some serious risks to long-term inflation," Garganas said in an interview late Sunday in Basel, Switzerland"------------http://www.financialsense.com/Market/wrapup.htm----------------------

[Curtman]

The helicopter is realy doing a tap dance for the senators this morning.

[Curtman]

He's good for the oil and gas stocks, haha expect it to run high and the economy can absorb haha. This guy aint sounding to bad for a fed man.
This is a very revealing interview.

[Curtman]

That term, "inflation targeting" eww just makes me want to take a shower.

[Ponce Cuba]

Never give the people to many bad news or they will do something about it, however, how many people really know what the M3 is? and much less how to read it.........to them this is something going on overseas like the killing of American in Iraq or Palestinians in Palestine and none of their concern, what a shame.

The only time the American will react to anything will be when it hits them over the head and by then it will be to late.

[wulfgar60]

No wonder 30 years ago it was ONE TRILLION: now it's TEN TRILLION.

(probably leaving out another 50% - because the truth hurts)

Five years from now it'll be TWENTY TRILLION - and everything we have will be worth (less) by 50%!

Got it the wrong way around History Student. What they wish to hide, is the M3 is going to start to contract.
When Wall Street see's that happen, the signal is "Abandon Ship"!
The GDP will be next, because that will start contract as well.
This is a deflationary depression scenario. Remember the last one?

The Fed can only print more currency, as long as the other CB's buy more US debt. Since the middle of last year they have halted net purchases.
This means if the Fed prints more currency, the Foreign CB's will no longer redeem US dollars for their national currencies.
You see they must back all of their own respective Mickey Mouse currencies in a respectable international medium.
This means they will buy Yen, Yuan, Euro's. Or anything that has real purchase power. If the Euro fails then its back to gold.
In the 70's they could escape the deflation, because their was no other competator to the US dollar than gold.
Gold almost won the fight in 1979.
Volkers high rates solved that. However this time the US has a level of debt it is unlikely to pay. The Greenback is toast in a few years, unless America can afford interest repayments equal to 1/3 the US GPD.
Got Oil? Got Gold?

[philskov]

I might need an economics lesson but. . .

Can the US Fed Res create their own demand for their currency to inflate the dow industrial averages. Do they need other CBs for their covert operations?

Could it be that they don't want the contradiction of greater expansion of money supply (M3) along with a less accommodative federal reserve rate (to strengthen the dollar) to be made public. So they stop publishing the contradictory M3 numbers: backroom expansion of currency while having a contractory monetary policy.

I don't claim to know, just need some splainin'. If anything I said made sense.

TIA

[philskov]

Maybe "save the dollar" AND expand M3. Which is contradictory, I know.

Choosing one over the other (dollar vs economic growth) means one or the other is doomed. They are trying to have it BOTH ways.

So they boost public perception of the dollar thru raising rates higher, and expand M3 without telling the public so they don't lose confidence in dollar.

This is their attempt to keep up their inflationary expansion, fudge the CPI numbers, and restore confidence in US$ by raising rates.


Help me out here, please

[NASDAQ_400]

BEST OF BILL BUCKLER


November 22, 2005


DEEP US FINANCIAL TREMORS


Something of fundamental global monetary importance is now beginning to happen inside the US monetary system. The Federal Reserve is trying to disappear behind a curtain – for very good monetary reasons. The US "broad money" measure (M3) has increased from $US 6.5 TRILLION to $US 10 TRILLION over the past FIVE years! That is an increase - and an inflation - of 53.8 percent in the US "stock of money" over those five years. And THAT, in turn, is the "monetary illusion" inside which Americans have been living. They have seen the "value" of their house climb as they saw their country's trade and current account deficits explode and the debt owed to the rest of the world climb ever higher as many of these "new" Dollars flowed out.
Straight From The Fed:
This is quoted from the website of the US Federal Reserve:
"Discontinuance of M3.
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)."
The purpose of all this is simple. After March 23, 2006, the Fed can go right on inflating but will able to HIDE what it is doing. The US government is ever more dependent on the world's foreign investors, just as their appetite for Treasury securities is fading. Overseas investors, who own half of ALL US government debt, bought only 14 percent of the $US 79 Billion in benchmark 10-year notes auctioned this year, down from 21 percent in 2004, says the US Treasury. The US will borrow a record $US 171 Billion in the first quarter of 2006, double the amount of this quarter. Now, the foreign money is sliding away.
The US current account deficit is $US 730 Billion or 6.3% of GDP. That has to be funded on top of the US Treasury's budget deficits. Stop the flow of foreign funds and the US economy contracts by 6.3%. If these external funds don't arrive as loans, the only other "option" in lieu of a US recession is for the Fed to "create" these funds. If they do that, the US M3 will explode. That is why the Fed wants to hide it….
The Fed is now firmly in the easily foreseeable bind which The Privateer has analysed in several past issues. If the $US 730 Billion needed to fund the US current account deficit does not arrive from off shore over the next twelve months, this would have the effect of drastically tightening internal US credit conditions. With the debt having to be sold internally, internal US interest rates would go up. The US borrowers of these funds would not show up as buyers of economic goods inside the US private civil economy. The US economy would contract - drastically. And THAT would bring on the long delayed and long "papered over" US economic RECESSION throughout the entire US economy.
What could the Fed do to counteract this? Cutting US interest rates once again would not be enough. That would signal to the world that yet another US credit expansion was on the way and the US Dollar would be right in the target zone for a global sell-off. If instead, the Fed decided to make a $US 700 Billion direct monetary infusion into the US monetary system, it would indeed have "replaced" the foreign funds which failed to arrive. But it would also have increased the US M3 by that amount. If the Fed then reported this in its usual way, the cat would be out of the bag for all the world to see.
What better way to try to avoid this dilemma than by simply NOT reporting the US M3 at all?

[Halophyte]

When the fed/gov can no longer monetize debt ..... SWHTF


.

[mozkill]

last year the average home in the US increased more than the average persons yearly income.

this home equity will eventually be converted to cash. there is going to be a flood of money . a home equity bubble, converted into cash. very soon. is this their plan?

[RichG]

Already tapped out...money all been spent....no where to go now...no money to be lent.
:smokin:

http://bigpicture.typepad.com/photos/uncategorized/bupdown_c04222005203757.gif (http://online.barrons.com/article/SB111421236708514915.html)"SPEAKING OF PICTURES that aren't very pretty, as we just were, take a gander at the two charts that adorn these scribblings. They're both lifted from Stephanie Pomboy's latest MacroMavens commentary and, frankly, they're more than a little ominous. For what they show is how dependent this quixotic economic recovery has been on IOUs.
The remorseless decline in wages as a percentage of personal income has reached an historic low of 62% (the chart to your left). Meanwhile, consumer spending as a percentage of wages continues to spiral upward (the chart to your right). In the past three years, Stephanie reckons, shop-happy consumers, cheerfully determined to live beyond their means, leaned a lot more heavily on borrowings ($675 billion of non-mortgage debt) than paychecks ($530 billion) to cover the $1.3 trillion increase in their spending.




Yesterday (via Doug Kass), I noted that the Consumer had grown increasingly levered (http://bigpicture.typepad.com/comments/2006/02/consumer_grows_.html). Why is this so important? Because of the relationship between Consumer Spending slowdowns and Bear Markets:
>
Bear markets begin when growth in real consumer spending (PCE) peaks and begins to slow
click for larger graphic

http://bigpicture.typepad.com/comments/images/w0804_1.jpg (http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/w0804_1.jpg)
Source: Joseph H. Ellis, Ahead of the Curve (http://www.aheadofthecurve-thebook.com/08-04.html)

Ellis notes: The relationship between economic slowdowns (led by downtrends in year-over-year consumer spending) and bear markets (vertical yellow bars) is remarkably consistent, though not infallible, over many cycles. Most bear markets begin (see circles) when the year-over-year rate of growth in consumer spending is peaking, and investor and general business optimism are at their highest! Considerable courage is required to reduce investments at such times.