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M3 Money Supply

Sunday, August 5, 2012 12:48

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It certainly feels that way at times. What were they thinking of when they leveraged up the balance sheets in 2007 to 100:1……..that’s correct…..100:1. Of course the figures varied widely but even many of the conservative figures showed that most of the multinationals had leveraged sheets of at least 40:1. You will never know for certain since the actual balance sheets are NOT to be shown to ANY public forum. That should tell you all you need to know. Factually as noted by one of our commenters last week the M3 money supply statistic was eliminated in 2006. M3 The category of the money supply that includes M2 as well as all large time deposits, institutional money-market funds, short-term repurchase agreements, along with other larger liquid assets.

I include a list from wikipedia below showing a compilation of money supply statistics…

M0: The total of all physical currency including coinage. M0 = Federal Reserve Notes + US Notes + Coins. It is not relevant whether the currency is held inside or outside of the private banking system as reserves.
MB: The total of all physical currency plus Federal Reserve Deposits (special deposits that only banks can have at the Fed). MB = Coins + US Notes + Federal Reserve Notes + Federal Reserve Deposits
M1: The total amount of M0 (cash/coin) outside of the private banking system plus the amount of demand deposits, travelers checks and other checkable deposits
M2: M1 + most savings accounts, money market accounts, retail money market mutual funds, and small denomination time deposits (certificates of deposit of under $100,000).
MZM: ‘Money Zero Maturity’ is one of the most popular aggregates in use by the Fed. It is M2 – time deposits + money market funds
M3: M2 + all other CDs (large time deposits, institutional money market mutual fund balances), deposits of eurodollars and repurchase agreements.
M4-: M3 + Commercial Paper
M4: M4- + T-Bills (or M3 + Commercial Paper + T-Bills)
L: The broadest measure of liquidity that the Federal Reserve no longer tracks. Pretty much M4 + Bankers’ Acceptance

Money Multiplier: M1 / MB. Currently as of 6/14/2012 it is .85. While a multiplier under one is historically an oddity, this is a reflection of the popularity of M2 over M1 and the massive amount of MB the government has created since 2008.

It should be noted that while the treasury can and does hold cash and a special deposit account at the Fed (fed funds), these assets do not count in any of the aggregates. So in essence paying taxes destroys the money supply. To counter this, the government created the TT&L program in which any receipts above a certain threshold are redeposited in private banks. The idea is that tax receipts won’t decrease the amount of reserves in the banking system. The TT&L accounts, while demand deposits, do not count toward M1 or any other aggregate as well.

Congressman Ron Paul (R-TX) claimed that “M3 is the best description of how quickly the Fed is creating new money and credit. Common sense tells us that a government central bank creating new money out of thin air depreciates the value of each dollar in circulation.” Of course if there is no M3 available I suppose the newly created money cannot pose a problem to the system. If you believe that a large black hole exists in the system which was created by over 1.5 Quadrillion in derivatives exposure (that Brooksley Born warned about) then you may understand what the Fed saw in 2005 when they proposed stopping M3. After all, there are people out there that can still apply simple math. Now we have entered the Zombie zone of banking and all of us should be aware that a gaping wound brought about by hubris is still bleeding. Printing will continue. Not only will it continue but it cannot stop. Hold tight with your investments but be aware……the idealogues such as Ann Barnhardt are correct about the system…..it is going to try and take every last morsel it can. Laws mean nothing to these carnivores…..and they are hungry.

2012-08-05 12:45:27

Source: http://kliguy38depression2news.blogspot.com/2012/08/m3-money-supply.html

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