Wikinvest Wire

Have you seen M3 lately?

Sunday, April 20, 2008

It's been two years since the Federal Reserve discontinued reporting of the M3 Money Supply statistic. Supposedly, it was too expensive to maintain and provided no useful information for formulating monetary policy.
Apparently, it can be done for a lot less than they were paying - at least that's the working assumption since websites such as NowAndFutures.com don't seem to be going broke doing it.

As for whether it provides any useful information, that is apparently very subjective. It looks useful to me and probably goes a long way in explaining why prices are now soaring everywhere but in the government's inflation statistics.

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8 comments:

Anonymous said...

It looks like M3 was going up before the current financial crisis became known. Does anyone have an explanation? Was the Fed pumping money before the crisis happened? Due to government deficit spending ?

little larry sellers said...

M3 has shot up 20% in the last 12 months? That's beyond scary. I was upset enough thinking it was ONLY about 15%.

Anonymous said...

where did you get this information if M3 is no longer reported?

Tim said...

It is reconstructed and backtested at NowAndFutures.com (as indicated above) and elsewhere on the internet.

Anonymous said...

Have you read Mish's take on M3?

http://globaleconomicanalysis.blogspot.com/2008/04/mzm-m3-show-flight-to-safety.html

Specifically the distinction between money and credit.

Tim said...

Yeah, what a shocker - current trends in M3 indicate deflation...
I try not to get too hung up on the words - I just like to look at the pretty curves that alway seem to move at 45 degree angles.

staghounds said...

No fiat money has ever been deflated, as far as I know in the historical record.

ted s said...

More from Mish in mid January when oil was $85:
http://seekingalpha.com/article/61119-commoditiy-boom-over-for-now

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