Fed kills a key inflation gauge

[elehhhhna]

Fed kills a key inflation gauge
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For me, something is wrong with this inflation picture.

Not according to the U.S. Federal Reserve, of course.
...

instead of expanding the definition of money, the Federal Reserve is contracting it.

I'm not generally a believer in Federal Reserve conspiracy theories. But in this instance, the conspiracy theorists make an intriguing point. The Federal Reserve decided to kill off M3, they argue, because it is the measure that shows the fastest growth in the money supply. For the 12-month period that ended in February 2006, for example, M3 grew at annual rate of 8%, but M1 grew by just 0.4% and M2 by 4.7%. Certainly, getting rid of M3 makes it harder to argue that the short-term inflation fighters at the Federal Reserve are actually very soft on long-term inflation. Maybe so soft that you could say they love long-term inflation.



http://moneycentral.msn.com/content/P148909.asp

[TomInTib]

1. It is worse than that. Look at the Federal Reserve site..

Pay close attention to the implications set forth in the 1st paragraph.
.............................

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).

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.
http://www.federalreserve.gov/releases/h6/discm3.htm

[ret5hd]

2. it helps if one understands that the fed's (greenspan and bernanke) fear..

is NOT inflation...it is wage inflation. As long as inflation is manifesting in the equities market, housing, energy, etc, inflation is GOOD, deflation is BAD. In fact, they DEMAND it.

But wage inflation is BAD, deflation is GOOD.

go figure.

[BillZBubb]

3. I think you just succinctly described Repug economics.

Inflation in capital assets. Deflation in labor rates.

[Neil Lisst]

7. Yeah, God forbid a working stiff starts making money.

The Pubs are concerned with preserving capital, and that means not risking it by allowing wage inflation. You're right. They're fine with inflating assets.

[chicofaraby]

4. K&R

[Neil Lisst]

5. some say it doesn't matter, that it's not needed as a gauge

I'm not one of them, but some say.

If I were you, I'd wait until Unlawful Combat responds to your thread. He's an expert on these matters, which is why we like to call him The Professor.

[tom_paine]

6. Imperial Amerikan Statistics have become distinctly Soviet in nature

Lying and wholly disconnected from reality.

We have not reached the point where 100% of Imperial Statistics are 100% OPPOSITE of what is really happening.

But we are moving in that direction in leaps and bounds.

Bushevik Statistics must be viewed intially as lies, then proved to be true (for the rare occasions that still occurs).

To accept the lying statistics of Tyrants is to further enslave yourself to them.

[Neil Lisst]

8. two biggest lies told now: (1) unemployment rate, and (2) inflation rate

People on the cusp of poverty are seeing 40-50% increases in a year on their energy costs. The lower the revenue, the greater the impact of energy inflation.

[wizdum]

9. The Federal Reserve is trying to hide the inevitable from us all...

...by no longer publishing the M3 figures. The economy is on the verge of a major crash a la 1929. Has anyone seen the price of gold lately? Or silver, or palladium for that matter. To the moon, Alice, and it has only just begun to rise. The dollar is really in trouble and that is why M3 is no longer being published.

[formercia]

10. Not only gold and silver but copper, Zinc and Aluminum

Copper went from around 50 cents a pound before the War on Iraq to over $2.60 at Friday's close. I would call that inflation. You can't make up for that with increased productivity or outsourcing....

All those Copper jacketed Bullets and Brass shell casings....

[wizdum]

11. Palladium is going through the roof too...

If it drops below 300 again, I'm jumping in baby. It's been yo yoing like that for a while now.

[formercia]

12. it was up over a thousand not too long ago n/t

[wizdum]

13. Now platinum is over 1000, so palladium is going up because...

it's cheaper. If palladium was 1000 once, it'll probably be there again. Sounds like time to jump in with both feet. BTW, what does n/t mean? I see posters using it all over the place.

[formercia]

14. no text, n/t