FED CHAIRMAN ANNOUNCES ‘NO MORE ANNOUNCEMENTS’
Today’s so-called “dollar” only purchases five cents of what
it purchased in the 1930s, 10 cents of what it purchased in the 1960s and 1970s,
and maybe 50 cents of what it bought in the 1980s. So the “crash”
of the paper dollar system is not something that is soon to happen; it is already
happening. But do even worse times lie just around the corner for the dollar?
The government and the privately owned Federal Reserve Bank want you to think
inflation is under control. But the truth is, the dollar is crashing from inflation.
From reading the headlines, one would think the Fed was a strong fighter against
inflation. For example, you may have heard about the March 28 decision to raise
short-term interest rates again to 4.75 percent—hailed as an “inflation-fighting”
In reality, according to those economists who can think and are not brainwashed,
it is well known that hiking interest rates is inflationary. What it does is
to increase the cost of doing business. And since virtually everyone is in debt,
it forces businesses to charge their customers more.
But what you probably did not hear about, and should have, was the ending of
the “M3” reports, on March 23. The Fed discontinued publishing M3
figures after that date.
According to an official announcement: “On March 23, 2006, the Board
of Governors of the Federal Reserve System ceased publication of the M3 monetary
aggregate. The board also ceased publishing the following components: largedenomination
time deposits, repurchase agreements and Eurodollars.”
The Fed’s announcement is one sign of a sinking U.S. dollar, and indicates
that former Fed chairman Alan Greenspan got out just in time, like a rat from
a sinking ship.
What is M3? You have to understand money supply to know what that is.
M1 refers to the sum of currency, or paper dollars, that can be spent immediately
by the public. M2 is M1 plus assets that have been invested for the short term,
including money market mutual funds and other financial transactions. M3 is
M2 plus all long-term deposits, including institutional money market accounts.
M3 refers to the broadest category of money in circulation.
The Fed changing its reporting of M3 deserved headline treatment and didn’t
get it. As the Federal Reserve had promised last November, the U.S. central
bank will no longer collect or publish this most-inclusive measure of the growth
of the U.S. money supply, although it will continue to publish narrower measures
such as M1 and M2.
There are actually two kinds of “inflation,” money supply growth
(real inflation) and price inflation, which is not really inflation, but we
have been conditioned to call it that.
The Fed—under Greenspan, and now under Ben Bernanke—has behaved
as if money supply growth didn’t matter and as if “price inflation”
were all that mattered. Even as they have raised interest rates in an effort
to cool off the economy and reduce demand for consumer goods, they’ve
continued to let money supply grow at close to double-digit rates. M3 grew at
a seasonally adjusted annual rate of 8.7 percent in the three months from November
2005 to February 2006. That’s faster than the annual rate—8 percent—for
the 12-month period beginning in February 2005.
So, as the Federal Reserve was “fighting inflation” by raising
interest rates to 4.75 percent, from 4 percent in November 2005, it was letting
the money supply grow by an inflationary 8.7 percent. Something is wrong with
this picture. And now, they simply have decided not to tell us what is going
Said Stephen Zarlenga, a prominent monetary expert, “I can’t
imagine what they think they are doing with this announcement. Inevitably, people
will think it is some sort of cover-up. The real problem with our system is
that banks—private entities—are allowed to create ‘money’
out of nothing.”