If I know most of you, your eyes gloss over when the wonks start talking about fiat currencies and M3 (or the disappearance of M3) - the Fed's money supply number.
Well, as the chicken are coming home to roost now, affecting your daily life more and more, it's something I'd recommend doing some research on. And portfolio repositioning as well.
When it takes $1 Million to buy a condo, $4 to buy a gallon of gas, and for us lucky Americans in Europe, $20 to buy a hamburger (seriously) - then you start seeing how silly little things like M3 relate.
From a monetary base of about $800 billion in 1971, the growth in money supply started to accelerate exponentially from 1987 onward, as Alan Greenspan became more comfortable in his role as Federal Reserve chairman.
During his term in office, he created more money than all the previous Fed chairmen combined. At the time of his appointment in 1987, the total broad-based money supply (M3) stood at $3.6 trillion. By the end of his 19-year tenure, it had increased nearly three-fold to a staggering $10.2 trillion.
Greenspan’s replacement, Ben Bernanke, is likely to surpass Greenspan’s record. He earned the nickname “Helicopter Ben” following a speech in which he said, “The US government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many US dollars as it wishes at essentially no cost”, and suggested that the US Fed could resort to dropping money from helicopters if necessary.
In the future, the amount of money created by the Fed will be difficult to determine since it has announced that, after March 2006, M3 will no longer be reported.
May 12, 2006
M3: Something that if you don't understand yet, you should - it'll affect your financial future like no other
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12 comments:
my point is your dollars are becoming worthless.
that doesn't preclude over inflated US based assets falling even faster than the dollar though
but to your point, things are relative. try to buy a house in england with your dollars. try to buy cheap crap from walmart with dollars. it'll get worse and worse.
other thoughts out there?
Is it just me or whenever kieth's online I can never hit the back button and I have to resart all over again?
How about getting your own $ printing press. Print what you need.
I hope the people who cashed out on the top were smart enough to convert it to gold or some other hard asset. When we get to the "buy commodities you don't need today because the money won't be worth as much tomorrow" stage they're going to be really pissed that they don't have that house.
well said Mamboni !!!
"The US had accumulated largest gold reserves in the world (and still has the largest gold reserves to this day)."
Do you have a link to an actual audit of how much gold the US Gov't still has? Ft Knox is hard to get into for a regular citizen to visit and see for themselves.
I think the US Gov't has been selling assets like the strategic materials reserve. That generates cash flow and helps keep the reported deficit down.
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