What's Going on With the Money Supply?

By now a lot of you have already heard, or read about the Federal Reserve System decision to cease the publication of the M3 money supply report on March 23, 2006. This report contains: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars.

For those of you who are not familiar with the M3 money supply . . .

The Federal Reserve has printed the money supply reports since 1959. The reports contain three categories of the money supply (the amount of money in our economic system). The three categories are M1, M2 and M3.

The M1 report contains the amount of currency in the hands of the public - checking accounts, travelers checks, demand deposits, and other deposits against which checks are written.

The M2 report contains the information in the M1 report, along with savings accounts, time deposits, and retail money market mutual funds.

These two reports (M1 & M2) will continue to be issued, however the M3 report as stated above will NOT be continued. WHY?

Well, that's a good question. The M3 report covers the broadest measure of money supply in our U.S. economy. 

Another question: What is the Federal Government trying to hide?

A lot of bloggers have been talking about the Feds decision for the past week, and it's interesting that CNN and MSNBC have not bothered to cover this story.

Rather than repeat or re-digest what others have said, head on over to one of the blogs we read - The Daily Kos. The article says basically what I was going to say, plus it goes a little deeper into the issue.    

And if you haven't already read our series on Euro Dollars vs. U.S. Dollars, be sure to include that on your reading list for a little history on how dollars and oil are tied together.

We'll come back to the question of "what's going on with the money supply" later this week. Until then, do a Google Search for m3 money supply report, and see what others are saying. And don't forget to stop by Daily Kos.