Page pulled from web site - Why?

[jmatthan]

http://jmpolitics.blogspot.com

"Page pulled - Why?

(Click to see enlarged images.)

Strangely, a breaking story "Federal Reserve orders two trillion dollars to be printed and put into circulation" which featured on the website "Axis of Logic" yesterday evening, which was brought to my attention by one of my regular correspondents, was pulled from the website....." more

Screenshot of the pulled web page and the retraction are at the link.

[The Magistrate]

1. Probably, Sir

Because it was nonesense put out to dupe economic illiterates into buying gold....

[SPKrazy]

2. Maybe So, However, Here's A Link

to a thread that discusses this and has a link to a video.

I can't view .ram videos, so I don't know what the vid actually is.

http://upload.democraticunderground.com/discuss/duboard.php?az=view_all&address=364x789801

[The Magistrate]

3. There Are Links To Any Number Of Things, Sir

This story was put into its current circulation by "Free Market News", and it is bogus.

That the category M3 is no longer being reported is true, but of no importance, as it was not something of any real use, and bears no relation to any sudden inflation of currency, nor does the absence of it give opportunity to hide same..

[Neil Lisst]

5. Sorry, but you're wrong. It does matter that they stopped reporting M3.

I'd like you to explain why the reporting of M3 is not important. It's a measure that we no longer have, compliments of the Bush administration. They're not disclosing it for a reason, and that reason is to keep the public from knowing how much money they're printing.

Here's what the Fed said about it, which you must believe:

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.

I'm no advocate for gold, but I don't hold the obvious bias you do against those who see gold as a great inflation hedge and see us entering a long run of inflation. Depriving the public of M3 does rob it of one barometer of the money supply.

Are you involved in investments which must compete with gold for investment dollars? People who trash gold are usually pushing paper or real estate instead.

[The Magistrate]

6. Several Points, Mr. Lisst

The M3 measure has nothing whatever to do with the amount of money being printed. M3 is a measure of illiquid accounts in dollar denomination already extant in private hands; such things as "jumbo" certificates of deposit on long term, that cannot be accessed as money without great penalty to the owner before their due date, and the largely notional accounts of derivative investments, that are in practice mere side-bets on economic activity, and have no real connection to underlying securities or capital. An attempt to conceal the printing of currency would require suspension of the M1 and M2 measures, which relate to more liquid forms of accounts, and actual currency in various hands.

If there is anything being concealed by the suspension of this measure, it would be the scale of the derivatives market, and the scale of this is indeed uncomfortable. There is something that "feels" wrong about a game in which the size of the side-bets approaches the sums actually staked by participants, so to speak. Such "investments" produce nothing, and are most generally backed not by cash but by paper loans, and there is certainly some danger that collapse of large positions in these "markets" could produce, by the need to make good on such loans, a serious drain on actual capital that could strain some large lenders, and so endanger the security of actual monetary deposits. But this danger is not directly related to the size of derivative activities; instead it flows from the soundness, or lack of soundness, of the calculations made by its participants. It may be true that the larger the sum total involved, the more participants and calculations there must be, and so a greater likelihood some of them are foolish must follow, but there exists no formula which yields a reliable measure of this probability.

It is quite likely there is a bout of inflation coming down the road. The government is tremendously in debt, and governments seldom pay their bills honestly when under great stress, but rather pay up in lower quality currency, this being achieved in the old days by alloying the coin with base metal and in the modern era by policies which make paper currencies worth less in terms of goods and services. But it is far from impossible that a restoration of sound tax policies, and economic growth, could restore the situation sufficiently to avoid this. That would require, of course, a change of administration, and in the composition of the Congress.

Gold is a commodity no more inherently valuable than paper or horse-meat or pistol cartridges, and that was true even in the days when it was officially monetarized, as it no longer is. Money in any form is worth only what it will exchange for, namely the various goods and services that make up the necessities, conveniences, and luxuries of life, and the capital goods and raw materials that enable production. It is the supply of these things, rather than the supply of money, or the form money takes, that determines the value of each unit of currency, and this is as true for a weight of metal as it is for a number printed on paper. The idea that gold represents some independent store of value is delusory, and even if that delusion is widely shared and deeply rooted, remains an illusion. When economic conditions worsen sufficiently, this is always demonstrated, and usually in pretty grim manners. When food is scarce, people are reluctant to exchange it for gold, and reluctant to do services for payment in it, prefering foodstuffs. Those who promote gold as a safeguard against economic troubles are simply preying on ignorance, and usually do so knowingly. All forms in which gold is widely sold to the public for "investment" involve a very high premium to the seller that makes the price of the stuff well above the market rate, and places the purchaser deeply in a hole in investment terms, that requires a stiff rise in the market price of the stuff for the buyer to even break even. You may be sure those who sell the stuff in this manner do not place their profits in the metal; rather, they acquire things of more enduring value, such as land and other capital goods.

[Atman]

7. That made my head hurt, sir!

But it was very interesting and informative. Thank you for posting!

[The Magistrate]

9. My Apologies, Mr. Atman

And many thanks for the kind words!

[lonestarnot]

12. hmmm wondered what happened now I know. Not sure I

understand yet, but will read and reread until I figure it out. Thanks Madge.

[Neil Lisst]

13. Not really

You prefer to believe the failure to report M3 is meaningless, and that's an opinion on your part. I prefer not to believe that, and think you're an apologist for the stock market and paper investments. Your haughtiness regarding gold is one indicator.

I'm not going to get into an argument with you, I'm letting people know that you're not an expert on this, and you're offering an opinion which is shared by many of the neocons.

You're on the same side of this argument as Bush and all his lackeys.

Your point of view is YOURS, and it's not shared by everyone. Here's one source that suggests why M3 is important. It's one indicator, and arguing that it is meaningless is entirely conclusory.





http://www.zealllc.com/commentary/redlightpf.htm

[The Magistrate]

14. That Is An Interesting Piece, Sir

It is always a pleasure to have an evocative journey through the wonders of the ancient world, and that part is very well done. It goes downhill somewhat from there, and where it is of value, has no relevance to the point you were advancing previously, namely that ceasing to track the M3 number provided an opportunity to hide the printing of vast sums of currency.

The author's point in the piece you have referenced is that rapid expansion of the M3 supply at a time when interest rates are low seems to coincide with an upcoming recession. He certainly presents no case that it causes such an event. Economic activity moves in cycles of expansion and contraction, and there does not seem therefore to be much of particular interest in the observation that an expansion is followed by a contraction. The author is a bear by nature, and bills himself as something of a contrarian, and so will be always scanning the horizon for something that can be taken as indicating trouble looms. There was a fairly wide consensus at the time this article was written in early 2001 that a contraction was in the cards, and certainly one developed, that owed to a number causes, including contraction of the "bubble" market, the unsound fiscal policies proposed by the incoming administration, and a degree of economic dislocation subsequent to the attack on the country later that year. The touted indicator here was hardly unique, and so cannot be regarded as prophetic in the light of subsequent events.

If you wish particularly to argue the matter of gold, Sir, my suggestion is that you take the matter up with the long-deceased Mr. Adam Smith, who comments at length on the matter in "Wealth of Nations". Or you might look into the economic commentaries of the Han historian Sima Qian, written about two millenia before Mr. Smith's efforts. The observation of the essential worthlessness of any medium of exchange, and notice that any such thing derives its apparent value from what it can be exchanged for, and through a widespread agreement by people to accept it in exchange for items of real utility, is hardly a new, or even particularly controversial one. All forms of investment have risks; all forms of investment depend for their value on a properly functioning economic system; none provide a useful store of value should that system fail catastrophically. In that event, nothing has value save food and the means to produce it, and weapons that enable its acquisition by force, should one lack those items.

[Neil Lisst]

21. Adam Smith? Thanks, but I'm driving.

There is no point in our talking if you think a piece of paper can ever be as solid as gold or real estate which is paid for. No, they aren't the same, in spite of what your Eco professor told you.

[The Magistrate]

27. Indeed, Sir

As you seem to be under the impression a measure of gold is as edible as a measure of corn or rice, and that the value attached to gold is somehow less illusory than the value attached to a piece of paper, there probably is little point to further exchanges on the matter. But it impossible to resist pointing out the degree to which your comparing gold to real estate reveals a basic misunderstanding of the concepts involved, and amounts to a comparison not so much of apples and oranges but more of apples and dandelion puffs. Land does indeed have real value: it is essential to the production of food or the harvesting of game, to the erection of shelter, etc.: gold has value only insofar as people will agree to accept it in exchange for such things, it is a commodity in a different class all together.

"Men, steel, gold, and bread are the sinews of war. Bread and gold may acquire men and steel. Men and steel can always obtain gold and bread."

[ProfessorGAC]

17. Here's Why

The M3 did not provide any information of value that one cannot get from M1, M2, Savings Rate, Foreign Savings Rate, and a few others. Those numbers are all still reported by the gov't. So, the failure to report M3 means nothing.

Any economist who says it matters is either an idiot or has an agenda that has nothing to do with economics.
The Professor

[Name removed]

22. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ProfessorGAC]

23. When You Get To My Level Of Ac hievement In This Field. . .

. . .your opinion will have merit. I've published 21 papers and won 5 awards in econometric analysis since 1983. When you exceed that let me know. Otherwise, keep your snide opinions of me to yourself.
The Professor

[Name removed]

26. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ProfessorGAC]

24. Repeated Post

The Professor

[ProfessorGAC]

25. Man This Triple Posting Is Bugging Me

The Professor

[ProfessorGAC]

15. 100% Correct

The M3 did not provide any information of value that one cannot get from M1, M2, Savings Rate, Foreign Savings Rate, and a few others. Those numbers are all still reported by the gov't. So, the failure to report M3 means nothing.
The Professor

[The Magistrate]

19. Thank You, Professor

As you know, it is always a joy and something of a relief to me to find you in agreement with my occassional comments on matters economic....

[ProfessorGAC]

16. 100% Correct

The M3 did not provide any information of value that one cannot get from M1, M2, Savings Rate, Foreign Savings Rate, and a few others. Those numbers are all still reported by the gov't. So, the failure to report M3 means nothing.
The Professor

[JohnyCanuck]

4. It's a BBC interview

If this is the ram video (real player) that you are referring to:

http://www.bbc.co.uk/newsa/n5ctrl/progs/06/hardtalk/walker27mar.ram

This is a video link embedded in a BBC web page and also in the web page linked to by the DU thread you listed above in your post. The BBC story is about a BBC interview with David Walker, America's Auditor-in-Chief:

Does the future spell economic disaster for America?

Stephen Sackur talks to America's Auditor -in-Chief, David Walker. Is America facing an economic disaster?

The richest, most powerful nation on earth faces a fiscal "tsunami" which threatens to overwhelm Government and citizens alike.

Who says so? America's auditor in chief, David Walker, whose job it is to oversee all Federal spending.

He's pleading with US politicians and taxpayers to face up to the harsh economic realities that come with an ageing population and spiralling budget deficits.

Link to the BBC article:
http://news.bbc.co.uk/2/hi/programmes/hardtalk/4857646.stm

Here's a brief synopsis of the Walker's position as given to the BBC.

Walker says there is not an iminent crisis, but if the economic problems are not addressed sooner rather than later there will be an ecomomic disaster not too far down the road because there'll be an aging population requiring more social services, medicaid etc. and a shrinking working age population to provide the financing for those services.

The types of steps that need to be taken will not be politically popular, therefore it's hard to get the politicans to pay attention and risk their careers by taking the necessary action. Unfortunately, the longer it takes the politicians to act to correct the problem, the harder it will be and the more difficult the corrective action necessary to fix.

He says the future ecomomic crisis is of much greater risk to USA's well being than attacks from terrorist fanatics, but it is the terror threat that gets everyone's attention.

Although overall it is somewhat alarming in tone, it is not nearly as hyper as the article about the supposed trillion of dollars being printed off on an emergency basies to keep the economy going which, it was implied, would lead to iminent economic collapse

[The Magistrate]

8. Quite True, Sir

Mr. Walker's concerns are very valid, and widely shared. But various scare-mongers are seeking to key off his statements to promote a panic they have concocted in their own minds.

[dogday]

10. Sunshine in Monetary Policy Act (Introduced in House)

http://thomas.loc.gov/cgi-bin/bdquery/z?d109:h.r.04892:

109th CONGRESS

2d Session

H. R. 4892
To require the Board of Governors of the Federal Reserve System to continue to make available to the public on a weekly basis information on the measure of the M3 monetary aggregate, and its components, and for other purposes.


IN THE HOUSE OF REPRESENTATIVES

March 7, 2006
Mr. PAUL (for himself and Mr. JONES of North Carolina) introduced the following bill; which was referred to the Committee on Financial Services


--------------------------------------------------------------------------------


A BILL
To require the Board of Governors of the Federal Reserve System to continue to make available to the public on a weekly basis information on the measure of the M3 monetary aggregate, and its components, and for other purposes.


Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Sunshine in Monetary Policy Act'.

SEC. 2. M3 MONETARY AGGREGATE REQUIRED TO BE PUBLISHED WEEKLY.

(a) In General- Notwithstanding the announcement by the Board of Governors of the Federal Reserve System on November 10, 2005, the Board of Governors of the Federal Reserve System shall continue, after March 22, 2006, to compile and to publish on a weekly basis the measure of the M3 monetary aggregate and the components of the M3 that are not included in the measure of the M2 monetary aggregate.

(b) M3 Monetary Aggregate Defined- For purposes of this section, the term `M3 monetary aggregate' means the inclusive measure of money compiled by adding the following:

(1) M1 COMPONENTS- Currency in circulation (plus traveler's checks), demand deposits, Negotiable Order of Withdrawal (NOW) accounts, and similar interest-earning checking account balances.

(2) THE NON-M1 COMPONENTS OF M2- Household holdings of savings deposits, small time deposits, and retail money market mutual fund balances (exclusive of balances held in IRA and Keogh accounts).

(3) THE NON-M2 COMPONENTS OF M3- Institutional money market mutual fund balances and managed liabilities of depositories consisting of large time deposits, repurchase agreements, and Eurodollars.


Anyone know the status of this bill?

[dogday]

11. Kick

[Gabi Hayes]

18. Is this a stupid question?

If the M3 is meaningless, why did it ever exist?

it obviously must have had relevance at some point.

did it have to do with value of dollar pegged to gold?

[lonestarnot]

20. Exactly! Why did it's meaningless existence occur in the 1st instance?