THE Federal Reserve Thread (merged)

dbarberic · **Joined:** Tue Sep 27, 2005 12:00 am **Posts:** 237

Some more M3 writings. Some articles questionable regarding bias, but all have good information.

Seems plenty of people are finding this very disturbing.

http://www.financialsense.com/fsu/edito ... /1114.html

http://www.markswatson.com/M3.html

http://www.freemarketnews.com/WorldNews.asp?nid=2055

All and all, I say this is raising some serious red flags about the Fed and the future of our US economy.

Pfish · **Posted:** Mon Nov 14, 2005 6:09 pm

Uhhh, not to be too silly here but if you look at all the new releases on the Fed's web site, http://www.federalreserve.gov/boarddocs/press/all/2005/ why can't you find this one. Did they removed it? Am I lookig in the wrong place?

troobloo · **Joined:** Wed Aug 24, 2005 12:00 am **Posts:** 5

Here's a link on the Fed web site about the discontinuance of another statistic in 2001:

Link

The release gives an explanation for the discontinuance and states that the Board solicited public comment regarding the proposed discontinuance.

Too bad this wasn't done with the M3.

Dukat_Reloaded · **Joined:** Sun Jul 31, 2005 12:00 am **Posts:** 1002

When they discontinue the report, I think that will be a good time to go out and borrow some money and buy valuable things that are undervalued or currencies that appear stable. At that time gold & silver may be too expensive to risk borrowing money for, property is still in a bouble and might be a risky investment, but if you can buy valueable items then pay off the loan 1 or 2 years later with devalued money, that would be an ideal senario. Perhaps buy future contacts for food, I wouldn't buy oil with it because I don't really believe in peakoil anymore and if the economey tanks, oil will become cheap. Need to find items that are currently undervalued and monitor their prices until march and then select one to buy depending on the price of the item.

robsmith · **Joined:** Tue Nov 01, 2005 1:00 am **Posts:** 32

azreal60 wrote:

Again, dodging the question does not answer it.

Here's one possible reason.

The Federal Reserve directly controls only M0, the monetary base (cash plus Fed deposits). Interest rates, M1, M2, and M3 are just measures of liquidity that are affected by M0, but the Fed has no control over them beyond its ability to control M0. The broader the measure of liquidity, the less is the correlation with M0. M3 is the broadest measure and is the least affected by Fed playing with M0.

The Fed is concerned not only with inflation but also, given the US's huge debts and deficits, with the possibility that raising interest rates may spark a rapid deflation. The Fed has lately been decreasing the monetary base - see http://research.stlouisfed.org/fred2/series/BASE/45. This is why interest rates are rising. M3 could fall much more in percentage terms than the monetary base if there is a fall in the stock market and the failure of some major banks. Not at all unlikely, IMHO. M3 captures what the "real" economic forces are doing better than the other aggregates, which capture what the Fed is doing.

The Fed may be preparing to distance itself from a collapse by saying they were only modestly restricting the growth of the monetary base, that they don't control M3, why they even removed it back in March 2006 because they don't control it. The calamity is not the result of what they're doing, but of the horrible debts and deficits that the politicians are running.

This explanation will have the advantage of being mainly true. The Fed's major negative contribution has been their attempt to control broader aggregates rather than simply grow the monetary base at a steady, low rate. An unsteady policy contributes to instability, helping to hide from the public what is going on long term.

It will be interesting to see how the Fed responds when asked about why they are dropping coverage of M3. It will be disturbing if they say it is because they don't control it.

Mesuge · **Posted:** Tue Nov 15, 2005 4:13 am

dbarberic> Great links. Thanks.. I'm just courious to what degree are other major governments complicit in this scheme. The EURO bankers in Frankfurt have got some serious dollars in reserves too I'd better watch the part of the equation as well, for any signs confirming this possible monetization of US debt by FED..

JBinKC · **Joined:** Sat Aug 14, 2004 12:00 am **Posts:** 258

This tactic disappoints me immensely. I feel omitting the data gives the stock market much more risk premium. M3 supply has been always a great leading indicator to the general stock market since I have been active at it. When M3 contracted after the Y2k scare turned out to be a bust the market tanked about a month after the data was released and it spared me from that painful crash.

some_guy282 · **Joined:** Sun Jul 18, 2004 12:00 am **Posts:** 680

robsmith wrote:

It will be interesting to see how the Fed responds when asked about why they are dropping coverage of M3. It will be disturbing if they say it is because they don't control it.

And who's going to ask them? The mainstream media? :roll:

I understand your point that the Fed doesn't directly control M3, but I don't think that's really a valid ratonale for them to stop publishing the data. Just because they don't control it doesn't mean it's not a valid indicator of economic health.

azreal60 · **Posted:** Sun Nov 20, 2005 10:23 pm

Wish i had had some spare money when that guy said buying gold might be a good idea. The price jumped almost 20 dollars a few days after they stopped reporting m3. I guess alot of people had the same idea.

Seadragon · **Posted:** Tue Nov 22, 2005 8:22 pm

Decided independently to buy into a diversified minerals and mining mutual fund about a month ago...it's now up about 10%. There's still opportunities in the hard commodities, not just gold.

rothschildsuck · **Joined:** Tue Nov 22, 2005 1:00 am **Posts:** 1

bobcousins wrote:

azreal60 wrote:

I still haven't seen a reason to stop publishing the data. I'm assuming they won't stop Collecting the data, after all, who would plan monetary policy for a nation without all the available data they could get. So why stop publishing it unless it was really bad news? I mean, float an alternate senario for it, cause i'm not seeing it.

Duh! If they are the ones doing the planning, and if they don't use it, why not save money by not generating it?

Now, you may disagree with the way they do their planning, but that is a separate question.

Duh? You are the most gullable non-economic thinker i have ever encountered. Save money?? Haha. THe government is not about saving money, if you haven't noticed the war in Iraq, hurricane rebuilding, etc. have ran our spending to record highs. I realize the Federal Reserve is a privately owned bank, which in itself should make you think twice about this situation, but the cost savings from not publishing M3 anymore is merely a rounding error on the Fed's budget. Please start engaging in more critical thinking before you simply accept what you are told.

dbarberic · **Joined:** Tue Sep 27, 2005 12:00 am **Posts:** 237

Here is a great, rational, non emotional, logical article on the elimination of the M3 data.

http://www.safehaven.com/article-4156.htm

Summery section of the article:

Quote:

Some of the reasons we have seen floated around are as follows:

History has shown that only failing economies e.g. Soviet Union keep data secret (Financial Sense - Toni Straka - Unpleasant M3 Trend, November 12, 2005). An interesting premise and a theme we saw woven amongst a number of writers is that they have something to hide. The claim is that the Fed should be transparent and by not publishing the number the Fed now lacks transparency.

The end of publishing of M3 in March 2006 coincides with the start of the Iranian Oil Bourse. The premise here is that the with the oil bourse trading in Euros there will be a rush out of US$ into Euros and that M3 could drop sharply. A sharp drop in M3 would of course presage a recession as falling M3 is a characteristic of weak economic periods.

M3 is a measure of inflation in the economy. A somewhat unproven rule of thumb is GDP + inflation = M3. Will be able to properly measure inflation going forward if we don't know what M3 really is.

We are about to enter a period of hyperinflation and by eliminating M3 we will not know how much liquidity the Fed is pumping into the system. Remember the Fed doesn't really print money it is the banking system that expands money supply. But the Fed influences it through open market operations. We will have to watch daily Fed repo action very carefully irrespective of whether they are going to publish Repos (RPs) as noted in the bulletin above. The Fed doing repos puts money into the system and the Fed doing reverse repos takes money out of the system. Of course as well this is the exact opposite of the collapse in M3 premised with the oil bourse above.

Further on the theme above a period of hyperinflation would occur as the Fed tries to save us from a collapsing housing market and softer consumer demand. The Fed adds more and more liquidity to the system to stave off a sharp economic decline. By not publishing Repos (RPs) as noticed in their bulletin above the Fed again is hiding what they do on a day to day basis. This will make it difficult for both currency traders and equity traders to know what the Fed is up to.

The conclusion is that the Federal Reserve will be hiding a debasement of the US$.

lakeweb · **Posted:** Wed Nov 23, 2005 6:01 pm

Yet another take on this:

Fed Abandons M3 Without An Honest Explanation

Best, Dan.

Pfish · **Posted:** Fri Nov 25, 2005 10:51 pm

Sean Corrigan has a pretty good take on it...

http://www.lewrockwell.com/corrigan/corrigan80.html

Dukat_Reloaded · **Joined:** Sun Jul 31, 2005 12:00 am **Posts:** 1002

I must admit the saving money is one of the most stupid things you can do right now. I believe the common thought of the saver has gone out of the window in the current 5 years. People are still borrowing money to buy property. I think if you want to make it, borrow and buy mining stocks, namely the high value metals. In afew years, the mining stocks will be like property and you'll make alot of money investing in them just as the people who borrowed money to buy property. Currently the way the system works is not in the savers favour, to make money just borrow and buy the mining stocks as that is the next boom.

THE Federal Reserve Thread (merged)

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