It Stops Tomorrow - March, 23, 2006

[Roland99]

http://www.federalreserve.gov/releases/h6/discm3.htm

What are they up to?

The dollar is weakening. Are they planning to pump more money into the economy to compensate for the housing bubble bursting? We all know that MEW is what's fueling the GDP right now. Take that away and nothing is left.

Will they pump more money and hide it to keep the dollar from weakening more but maybe somehow reverse the trade/current account deficit?


Also, look at how gold/silver are at 20-25 year highs.



I just can't put my finger on what exactly they are up to but it stinks...stinks like mad.


Perhaps by hiding the Repurchase Agreements the gov't can then fund more issuing of debt by just printing more money?

[MADem]

1. I sense a certain odor as well, and certainly a great malaise nt

[Roland99]

2. Ron Paul introduced legislation to reverse that decision

http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.4892:


That was on March 7 but I don't see any further action on it.

[Sammy Pepys]

3. What do you mean by "pump more money?" n/t

....

[Roland99]

4. Print more money.

But that has a result of increasing inflation.

But, if China/Japan stop funding our debt, who will? Perhaps this is a way to do it? Print more money for the Fed to buy US Treasuries and hide that fact?

[Sammy Pepys]

8. OK, I'm going to need a tutorial here....

According to that press release:

Measures of large-denomination time deposits will continue to be published by the Board in the Flow of Funds Accounts (Z.1 release) on a quarterly basis and in the H.8 release on a weekly basis (for commercial banks).

M3 does not appear to convey any additional information about economic activity that is not already embodied in M2 and has not played a role in the monetary policy process for many years.

I'm missing what's so critical about this. I'm also missing how this would enable them to secretly print more money.

[Roland99]

9. Perhaps this might help a bit....

http://en.wikipedia.org/wiki/Money_supply

Because(in principle) money is anything that can be used in settlement of a debt, there are varying measures of money supply. The narrowest (i.e., most restrictive) measures count only those forms of money available for immediate transactions, while broader measures include money held as a store of value. The most common measures are named M0 (narrowest), M1, M2, and M3. In the United States they are defined by the Federal Reserve as follows:

* M0: The total of all physical currency, plus accounts at the central bank which can be exchanged for physical currency.
* M1: M0 + the amount in demand accounts ("checking" or "current" accounts).
* M2: M1 + most savings accounts, money market accounts, and certificate of deposit accounts (CDs) of under $100,000.
* M3: M2 + all other CDs, deposits of eurodollars and repurchase agreements.

As of March 23, 2006, information regarding M3 will no longer be published by the Federal Reserve. The other three money supply measures will continue to be provided in detail. On March 7th, 2005, Congressman Ron Paul introduced H.R. 4892 in an effort to reverse this change <1>.

http://en.wikipedia.org/wiki/Repurchase_agreement

Repurchase agreements when transacted by the Federal Open Market Committee of the Federal Reserve in open market operations initially add reserves to the banking system and then withdraw them; reverse repos initially drain reserves and later add them back.

Under a repurchase agreement ("RP" or "repo"), the Federal Reserve (Fed) buys US Treasury securities, U.S. agency securities, or mortgage backed securities from a primary dealer who agrees to buy them back, typically within one to seven days; a reverse repo is the opposite. Thus the Fed describes these transactions from the counterparty's viewpoint rather than from their own viewpoint.

If the Fed is one of the transacting parties, the RP is called a "system repo," but if they are trading on behalf of a customer (e.g. a foreign central bank) it is called a "customer repo." Until 2003 the Fed did not use the term "reverse repo" - which it believed implied that it was borrowing money (counter to its charter) - but used the term "matched sale" instead.

Maybe I'm being a chicken little but something about this is rotten...I just can't put my finger on it.

[Sammy Pepys]

10. Thanks...

I'll check those out.

[Roland99]

16. Sure thing. And check out post #15, too.

[wicket]

5. Nice find

This will certainly be interesting to watch- it definitely DOES stink.

[slide to the left]

6. Nothing wrong

SO works for the Fed. he has assured me this is no big deal

[Roland99]

7. I'm not buying that. NOTHING with this admin is ever done w/o an ulterior

motive.

[slide to the left]

11. well

I agree with that statement, but, Burnake is well qualified and is actually who I feel any president would have picked

flame away

[Roland99]

12. I'll leave the flaming to others but you sure exposed yourself

[Roland99]

13. The Mess That Greenspan Made....(good read)

The Mess That Greenspan Made
How 18 Years of Easy Money Have Changed the World
http://themessthatgreenspanmade.blogspot.com/2005/11/m3-moneyness-and-conspiracy-theories.html

[MadHound]

14. My hunch is that this is being done to muddy the waters

To make sure that the reason(s) inflation suddenly takes off are obscured. We're already experiencing 3-5% inflation, but with our debt load, soon we're going to experience more. This is going to be financed by printing more T-Bills, thus raising the interest rates, thus increasing inflation. In addition, the debt is going to be paid down by simply printing more money, thus also increasing the inflation rate. Both of these moves will be obscured by not printing the M3 reports.

[Roland99]

15. Check out this statement from Rep. Ron Paul - The End of Dollar Hegemony

http://www.house.gov/paul/congrec/congrec2006/cr021506.htm

There's a video link of his speech on his website:
http://www.house.gov/paul/

[Roland99]

17. Kick for the evening.