Can M3 be Saved?

Monday, March 06, 2006 | 07:33 AM

I always find it curious when a good source of public data gets cancelled by an administrative source.

Mass layoffs were the first victim, killed by the White House in 2003.

Next came the proposed ending of funding for a Census Bureau survey on the economic well-being of U.S. residents -- a move decried by both the left and the right.

But the most egregious and unwarranted cancellation of a data source has been the Federal Reserve plan to end M3 reporting. It struck me that Ben Bernanke's defense of this was the first blot on his tenure as new Fed Chair.

Its a clean historical data series. Its accurate, not seasonally adjusted, not hedonically altered. There is really no good reason to cancel this.

For a nation that is capable of scrapping together 100s of millions of dollars for an Alaskan bridge to nowhere, it is ridiculous that an important measure of money supply will no longer be reported, ostensibly as a cost cutting measure.

Puh-leeze. That's tough to believe, especially when we look at M3.   

M2_v_m3 Its no coincidence that M3 has been soaring in advance of its impending death: Jim Picerno observes that "The broadest measure of U.S. money supply -- the so-called M3 -- has less than a month to live, but its swan song continues to be one of growth, and growth that's notably higher relative to that of M2, the official replacement for the doomed series."

As the Federal Reserve data makes clear, M3 is growing at a much faster pace than M2 -- which  has a time-lag and contains no "electronic" money.

Given the current account deficit, and any structural risks to the US dollar, as a fund manager, I want access to more and not less information. 

>
Its not too late to save M3: Congressman Ron Paul is sponsoring a bill that will require the Fed to continue to monitor and report M3. This bill will need your support.

You can contact the congressman at:

Ron Paul
Washington, DC
203 Cannon House Office Building
Washington, DC 20515
Phone Number: (202) 225-2831

A historically clean, accurate data source is a terrible thing to waste . . .

022806

>

Related links:

US FED discontinues reporting M3 data    http://en.wikipedia.org/wiki/Petroeuro#US_FED_discontinues_reporting_M3_data

The End of M3 Reporting?
http://bigpicture.typepad.com/comments/2005/11/the_end_of_m3_r.html

M3 DEATHWATCH
http://www.capitalspectator.com/archives/2006/02/m3_deathwatch.html

Where Do All Those Numbers Come From?    http://www.econbrowser.com/archives/2006/03/where_do_all_th.html

Money Supply and the End of M3
http://bigpicture.typepad.com/comments/2005/11/money_supply_an.html

Historical M2 vs M3
http://bigpicture.typepad.com/comments/2005/11/historical_m2_v.html

Chart of the Week: M1, M2, M3 Money Supply Components
http://bigpicture.typepad.com/comments/2005/11/chart_of_the_we_2.html

DOES M3 MATTER?
http://www.capitalspectator.com/archives/2005/11/does_m3_matter.html

M3--THE FINALS DAYS   
http://www.capitalspectator.com/archives/2006/01/m3--the_finals.html

M3 Reporting: Whats The Big Deal?
http://www.safehaven.com/article-4170.htm

Monday, March 06, 2006 | 07:33 AM | Permalink | Comments (25) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

bn-image

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00d83479262753ef

Listed below are links to weblogs that reference Can M3 be Saved?:

Comments

You have misrepresented Bernanke's argument for killing M3. It is not merely a money saving effort. Bernanke said that M3 has lost its correspondence to other macro variables. Fed economists aren't able to make good use of it, so they intend to stop building the series. Can you show that M3 does, in fact, have some current value as a predictive tool?

There is the obvious problem that M3 might again become useful as a predictive tool, but that we can't know that if the series is no longer published. However, the same could be said for various monetary aggregates the Fed has created along the way.

Posted by: kharris | Mar 6, 2006 8:55:38 AM

The comments to this entry are closed.



Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      

Archives

Complete Archives List

Blogroll

Blogroll

Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:


Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites

FeedBurner


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo

Disclaimer

Disclaimer

Odds & Ends

Site by Moxie Design Studios™

FeedBurner