Archive for February 12th, 2009
Buried In Stimulus Package–Federal Reserve Will Buy New Helicopter For Dropping Money–Targeted, Temporary, and Timely–Money Payoff Drops– Video!
“It is a cruel thought, that, when we feel ourselves standing on the firmest ground in every respect, the cursed arts of our secret enemies, combining with other causes, should effect, by depreciating our money, what the open arms of a powerful enemy could not.”
~Thomas Jefferson to Richard Henry Lee, 1779. ME 4:298, Papers 2:298
ABBA – Money Money Money (Abba-dabba-doo)
The Federal Reserve helicopter that drops money to failed investment and commercial bank executives needs to be replaced due to overuse:
Altoona Curve Money Drop
The new helicopter will be purchased from Red Bull as part of the Stimulus Package:
Red Bull Helicopter does back flips!
Now if the Federal Reserve could only find and rescue the “missing and run-away” M3 money supply:
Fox News Hyperinflation M1 M2 M3 Money Supply Debt Soup Lines Glenn Beck Weimar Germany
Now and Futures.com
http://www.nowandfutures.com/key_stats.html
Maybe the Fed needs search and rescue helicopter for financial disasters like this one:
Awesome Helicopter Rescue!
Add it to the stimulus bill.
The Beatles – Taxman
“The budget should be balanced, the treasury should be refilled and the pubic debt should be reduced. The arrogance of public officialdom should be tempered and controlled. And the assistance to foreign lands should be curtailed, lest we become bankrupt.”
~Cicero, 63 B.C.
Background Articles and Videoes
More wheeling, dealing, and backroom scheming
By Michelle Malkin
Yes, it’s sunlight-evading, earmark-stuffing business as usual there.
The buzz on the Hill is that Mitch McConnell is ready to fold, three more Senate Republicans may be joining the Turncoat Caucus, and the House may break a promise it made yesterday to make this process transparent and delay any vote until the final conference agreement had been posted onlin for 48 hours: …”
http://michellemalkin.com/2009/02/11/more-wheeling-dealing-and-backroom-scheming/
The Return of M3 Money Supply Reporting
“Last year, we lamented the passing of M3 reporting. This broadest of money supply measures had shown a discomforting increase in liquidity, far greater than what M2 was revealing.
At the time of the M3 announcement, we suspected the Fed was attempting to cover their tracks, disguising an ongoing increase in money supply and an unstated “easing” in Fed bias. Since that time, we have learned: the Treasury Department was also adding liquidity — a duty they have assumed, in part, in addition to the same performed by the Fed. Indeed, based on the credit growth data Doug Noland published last month (October Credit Review), it appears that the Fed has – despite increasing interest rates – actually eased over the last two years.
In light of all this excess cash sloshing around, we wondered what M3 might look like if it were still being reported.
Wonder no more: We have located 2 separate sources for the reporting of M3. The first is Nowandfutures.com. As this article discusses, recreating M3 from publicly available data was relatively easy to do (to 5 nines accuracy).
http://seekingalpha.com/article/21027-the-return-of-m3-money-supply-reporting
The Money Supply
“…
- In March 2006, the Board of Governors ceased publishing the M3 monetary aggregate.
The Federal Reserve System and public- and private-sector analysts have long monitored the growth of the money supply because of the effects that money supply growth is believed to have on real economic activity and on the price level. Over time, the Fed has tried to achieve its macroeconomic goals of price stability, sustainable economic growth, and high employment in part by influencing the size of the money supply. In the past few decades, however, the relationship between growth in the money supply and the performance of the U.S. economy has become much weaker, and emphasis on the money supply as a guide to monetary policy has waned.
Money Supply Measures
The Federal Reserve publishes weekly and monthly data on two money supply measures M1 and M2. The money supply data, which the Fed reports at 4:30 p.m. every Thursday, appear in some Friday newspapers, and they are available online as well. The Fed publishes measures of large time deposits on a quarterly basis in the Flow of Funds Accounts statistical release.
The money supply measures reflect the different degrees of liquidity—or spendability—that different types of money have. The narrowest measure, M1, is restricted to the most liquid forms of money; it consists of currency in the hands of the public; travelers checks; demand deposits, and other deposits against which checks can be written. M2 includes M1, plus savings accounts, time deposits of under $100,000, and balances in retail money market mutual funds.
The chart below shows the relative sizes of the two monetary aggregates. In April 2008, M1 was approximately $1.4 trillion, more than half of which consisted of currency. While as much as two-thirds of U.S. currency in circulation may be held outside the United States, all currency held by the public is included in the money supply because it can be spent on goods and services in the U.S. economy. M2 was approximately $7.7 trillion and largely consisted of savings deposits. …”
“…In March 2006, the Federal Reserve Board of Governors ceased publication of the M3 monetary aggregate. M3 did not appear to convey any additional information about economic activity that was not already embodied in M2. Consequently, the Board judged that the costs of collecting the data and publishing M3 outweigh the benefits.
July 2008 …”
http://www.newyorkfed.org/aboutthefed/fedpoint/fed49.html
Money Supply
“In economics, money supply, or money stock, is the total amount of money available in an economy at a particular point in time.[1] There are several ways to define “money”, but each includes currency in circulation and demand deposits.[2][3]
Money supply data are recorded and published. Public- and private-sector analysts have long monitored changes in money supply because of its possible effects on the price level and the nominal or real value of output.[4] That relation is historically associated with the quantity theory of money and evidence of a direct empirical relation between long-term price inflation and money-supply growth. These underlie reliance on monetary policy as a means of controlling inflation.[5][6]
Money is used in final settlement of a debt and as a ready store of value. Its different functions are associated with different empirical measures of the money supply. Since most modern economic systems are regulated by governments through monetary policy, the supply of money is broken down into types of money based on how much of an effect monetary policy can have on each. Narrow measures include those more directly affected by monetary policy, whereas broader measures are less closely related to monetary-policy actions.[6] Each measure can be classified by placing it along a spectrum between narrow and broad monetary aggregates. The different types of money are typically classified as Ms. The number of Ms usually range from M0 (narrowest) to M3 (broadest) but which Ms are actually used depends on the system. The typical layout for each of the Ms is as follows:
- M0: currency (notes and coins) in circulation and in bank vaults, plus reserves which commercial banks hold in their accounts with the central bank (minimum reserves and excess reserves). M0 is usually called the monetary base – the base from which other forms of money (like checking deposits, listed below) are created – and is traditionally the most liquid measure of the money supply. [7]
- M1: currency in circulation + checkable deposits (checking deposits, officially called demand deposits, and other deposits that work like checking deposits) + traveler’s checks. M1 represents the assets that strictly conform to the definition of money: assets that can be used to pay for a good or service or to repay debt. Although checks linked to checking deposits are gradually becoming less popular, debit cards linked to these deposits are becoming more popular. Like checks, debit cards, as a means to complete a transaction through their links to checkable deposits, can also be considered as a form of money.[8]
- M2: M1 + savings deposits, time deposits less than $100,000 and money market deposit accounts for individuals. M2 represents money and “close substitutes” for money. [9] M2 is a key economic indicator used to forecast inflation.[10]
- M3: M2 + large time deposits, institutional money-market funds, short-term repurchase agreements, along with other larger liquid assets. M3 is no longer measured by the US central bank.[11] …”
http://en.wikipedia.org/wiki/Money_supply
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