Can M3 be Saved?

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. 

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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

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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

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Real Estate Round Up

This past week saw a lot of Real Estate related data, all of which fits our long term thesis about the macro economy and what’s to come over the next few years.

For those of you who may be newer to the site, we have been dicussing this for quite a while: starting in December 2004, we noted how Real Estate was a prime driver of the economy, and in Spring 2005, how new hiring was overly reliant on the Real Estate Sector; in August 2005, we called that Housing was beginning to show signs of cooling, and that this would eventually wreak havoc on consumer spending. In the Fall 2005, we noted how dependent GDP had become on Mortgage Equity extraction. You can find all of these by using the site search function, right sidebar.

Now as  of March 2006, most of these concepts have become widely recognized and (mostly) accepted — but when they were first introduced here, there was no small amount of incredulity and pushback surrounding them.

Looking forward, I see rates rising, housing cooling further, the consumer cutting back, and the stimulus driven economy slowing, if not slipping into an outright recession.

On to the round up:

Existing Home Sales Slip 5th Consec Month

Home Foreclosure Surge

Home Prices Decellerate

Supply Up, New Homes Sales Down

New Homes Sales: 4th Drop in 6 months

• And the most ironic piece of all, The WSJ’s Greg Ip Discovers Data Manipulation

There’s more all over the web if you want to surf, but that’s the main gist of it.

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UPDATE March 5, 2006 4:44pm

The NYT’s Sunday Magazine is all about Real Estate

Go to Introduction: The For-Sale Society

See the Sunday Times Mag TOC after the jump . . .

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