Thursday, March 13, 2008

Ron Paul on M3 - monetary inflation UNCHECKED

the following two articles about the M3 money indicator that is no longer followed.
Here and Here.

In first blog, there is a link to leading to the federal reserve Discontinuance of M3 and why. In it, the federal reverse has stated that the 'cost' of collecting M3 outweigh the benefits. As if we really believe that they are cost-cutting a key indicator, yet have 2 trillion for wars. Anyway, taking out the M3 is HUGE and has severe consequences.

First, M1 and M2 are chump change compared with the big potatos M3. M3 is the sum of M1 and M2 (which mean nothing because you can just subtract M1 and M2) and the 'big money'. So M3 is actually the monitor (or was) on the large denomination ($100,000 or more) time deposits, balances in institutional money funds, repurchase liabilities issued by depository institutions, and Eurodollars held by U.S. residents at foreign branches of U.S. banks in the U.K. and Canada.

The assumption that Bernanke tries to "sell" to the American public is that the M1 and M2 already show anything that the M3 might tell. This is misleading and is only true if the large money (that comprises M3) stay in the market to become M1 or M2 on next years report.

The gist is that the government can pump an "unknown" amount of money into the market, as long as that money can be "removed" or withdrawn from the market within the year, it will NOT show up in the M1 or M2 numbers the following year. However, as we see, the value of the dollar is falling. This is an indirect indicator how much M3 they are pumping into the market. And since the American people are unaware of this new strategy (at least new to me) then you can have (psy op?) economists saying it's great, and others saying the opposite, and the only indicator is the falling dollar, which can also be twisted that a devalued currency good for foreign investment in the U.S. Though in reality it is a hidden tax on the income made in a year as prices are rising domestically, and on a global perspective, this hidden tax (inflation) is not only a tax on the income of 'that particular year' of income, but on ALL income ever made. This unreportable money pumping is generating a lot of volatility in the market. On the one hand stocks rise because there seems to be a lot of "new" money into the market. Then the market realizes that it is from "printed" M3 money, which drops the value of the dollar (remember Dana Perino â..Under Strict Instructions To Not Talk About The Dollarâ.). How long this will continue seems to be the remainder of the Bush administration, but how effective this strategy will be remains to be seen. How low can the dollar go? And at one point do all Americans say that their money is only worth something domestically and worthless anywhere else. As Bernanke has said he is only concerned the mandate of the federal reserve, which is to maintain price stability, and to his mind means "consumer prices" or the CPI.

Now remember, the US has only one product that it produces with a high profit margin, weapons. So 9/11 had its purpose, intentionally or by accident (though highly probable with a growing body of evidence on purpose, e.g. PNAC). Yet oddly, either in 'wartime', obviously, by a tense global environment (just sell to both sides of a conflict or for self defense) or in 'peacetime' you can produce weapons. The only trick for peactime weapon production is the need a formidable enemy (explained below).

If a Republican gets elected then in order to support the economy the middle east will continue to be unstable, and the US will continue to "sell" its high profit weapons to both sides while at the same time creating profitable weapons for its own defense from those scary "terrorists".

If a Democrat is elected as under Clinton the process can be continued, if the Democrats initiate peace. As long as you have a formidable enemy (as we did against the USSR during the cold war). A peacetime economy needs a formidable enemy such as China or Russia to ignite another Cold War, or arms race to justify spending on more weapons, 'try' to outspend the other side, and boost the economy.

Whether the Bush administration sees this dilemma and is prepping the "formidable enemies" to sustain a new cold war against the US by devaluing our currency and giving them the economic ability through elevating theirs (China, Russia, or the EU) time will tell.

Factored in in both scenarios, is who has control of the 'dirty money' both from drug smuggling of Afghanistan's products and in pilfering of oil reserve profits from our new conquered imperialized land of Iraqi oil. This dirty or money laundered money is then pumped into the economy and makes corporations net income look more attractive. Seems no one does this better than the 'C-ocaine IA', the 'Al-(CIA)da "scary" terrorists', or propaganda to support all this through the 'CNN, CIA News Network'.

And the only thing Bush is doing to to attempt to invade Iran.

Ron Paul - 2/17/2007

Ron Paul opening statement to Bernanke at FSC - 2-27-2008

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posted by u2r2h at 8:41 PM


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