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| Bye-Bye, M3, but Why? - Nov. 14, 2005 |
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Summary
Last Thursday afternoon, in what legitimately can be described as cryptic fashion, the Federal Reserve announced that commencing in March, it would stop releasing monetary aggregate "M3." Why?
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Many of us believe that the various money measures are very important analytical tools. In this regard, aggregate "M3" is right up there among the more important. Apparently, though, the Federal Reserve does not agree, although it does not tell us why.
(As of the end of October, M3 exceeded $10 trillion in size. The nature of its components make it the best place to turn to try to assess possible "intervention" [euphemism for "manipulation"] in the financial markets.)
Last Thursday afternoon, the Fed made what I consider a bizarre announcement that beginning in March, it will stop releasing M3, as well as the more important components that comprise this critical measure. "Bizarre"? Yes, I think so, but surely no less than "strange." The announcement came late in the afternoon of a day in which there was an early closing in the bond market, and on a day preceding a bond-market and banking holiday.
At minimum, that qualifies as "strange." But so is doing away with M3 -- unless you are planning ahead in trying to hide something. Am I suggesting there might be something of a nefarious nature going on here? I certainly am!
(Perhaps this is a precursor to Chairman Bernanke's first helicopter money-drop operation?)
As stated earlier, the announcement, such as it was, contained no explanation of why the Fed is doing this. An excerpt follows.
This development has a very bad odor to it, so you can be sure we will be revisiting it soon.
Part of Federal Reserve Announcement of 11/10/05:
"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 time deposits, repurchase agreements (RPs), and Eurodollars. ..."
The "entire" announcement can be accessed at "Discontinuance of M3."
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