Monday, March 06, 2006

M3 - It's not just a great car....

I'll try to keep this as light as economics can be - M3 money supply is an important measure of money in the economy that is unadulterated by seasonal swings, etc. It is a key number to consider, if you are of the opinion (as I am) that inflation is being underreported and to anyone investing in the US stock or bond markets.

Unfortunately, this measure is being cut in the interest of saving federal dollars. If the trend in M3 was relatively benign I wouldn't be all that concerned with losing the data, but M3 has shown a dramatic spike upward in the past three years. This spike is of great concern for inflation hawks and current account deficit watchers.

Congressman Ron Paul (R-TX) has begun an effort to restore the M3 measurement. Please contact your congressman - Republican or Democrat - and encourage them to promote this bill. Without this data our ability to make accurate assessments of the US economy will be severely curtailed.

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