THE FED ANNOUNCES IT WILL HIDE M-3
TO KEEP YOU FROM KNOWING WHAT?
by Robert McHugh, Ph.D.
November 14, 2005The Federal Reserve announced on November 10th, without explanation, and I quote, “On March 23, 2006, the Board of Governors of the Federal Reserve System will cease the publication of the M-3 monetary aggregate. It will also cease publishing the following components: large-denomination time deposits, RPs, and Eurodollars. The Board will continue to publish institutional money market mutual funds as a memorandum item on this release.”
Why? It’s simple, really. So that the Plunge Protection Team can hide its market manipulative, equity buying activities. You see, one of the key differences between M-2 (which it appears they will report) and M-3, is repurchase agreements. This is perhaps the most obvious reporting item where PPT market buying transactions show up. If they no longer report this item, folks like us who monitor the growth of M-3 for clues as to when the PPT is likely to buy the market, will have a harder time reporting that fact before, or even as, the PPT buys. Investors will be left more in the dark as to any secret rigging of the stock market. Why now? Apparently the Federal Reserve (a key member of the Working Group, a.k.a. Plunge Protection Team) sees a coming need to buy — or facilitate the buying — of markets, including the equity market, incognito. Apparently, they don’t want investors knowing they are the ones doing the buying, keeping prices up, or pushing them higher.
We have continuously demonstrated the high correlation between growth in M-3 and a rising stock market. We have also demonstrated that when M-3 either declines or stays the same, the stock market is prone to decline. The Fed knows its hypocritical hyperinflationary expansion of the money supply recently has been publicized by Fed watchers, and that 12 percent annualized growth in M-3 during a time when the Fed is raising short-term interest rates aggressively, and jawboning a determination to stop inflation, is nothing short of illogical, bizarre Fed behavior. The reason for the dichotomy is quite simple. The Fed can electronically print money and hand it over to the PPT to buy this stock market. That has to be why all the extra M-3 growth over the past several months.
When we presented the Hindenburg Omen analysis several weeks ago, we warned that the PPT would likely buy this market to stop the higher-than-normal probability that the market could crash. Why did we warn that the PPT would likely buy this market, and stop any potential crash? Because of the M-3 numbers. We could see there was too much money being created. We know that the way money gets into the economy is by the Fed buying securities. Inflation is too much money (M-3) chasing goods. Well, GDP (goods and services) is growing annually around 3.8 percent, yet M-3 was being pumped at three times that rate of growth. The difference had to go somewhere. It did. Into markets, and very probably equity markets.
...
http://www.financialsense.com/fsu/editorials/mchugh/2005/1114.html Now, would the FED cause a one-day market "crash" to emphasize the dire need of a Bailout Bill?
Nah, too tinfoily, right? :shrug:
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