The End of M3 Reporting?

OK already!

This is the unusual research (previously mentioned) under investigation:  The announced end of publication of the M3 monetary aggregate reporting.

I already have a request in to the Fed about this, and I will be following up tomorrow. As soon as I have something concrete, I will update the Big Picture.

I didn’t want to discuss this until after I did more research, so as not to get all the Gold Bugs and Tin Foil hat crowd all worked up for what might be no good reason.  Now that the comments have let the cat out of the bag, there was no reason to sit on this any longer.

By the way, there is no reason to look at seasonally adjusted data if your chart covers ALL the seasons — as this multi-decade chart does.<space

M3 Money Stock Spike
click for larger chart

Source:  Federal Reserve Bank of St. Louis


Funny, without the adjustment, it looks even spikier! Pretty wild, huh?

Here’s what the Fed had to say about it:

Discontinuance of M3

On March 23, 2006, the Board of Governors of the Federal Reserve
System will cease publication of the M3 monetary aggregate. The Board
will also cease publishing the following components: large-denomination
time deposits, repurchase agreements (RPs), and Eurodollars. The Board
will continue to publish institutional money market mutual funds as a
memorandum item in this 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).


Oh, and credit where credit is due:  Hat Tip for first identifying this issue (if it actually turns out to be one) is shared by The Prudent Investor, Mike Runge and Will Thornton

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What's been said:

Discussions found on the web:
  1. Idaho_Spud commented on Nov 13

    Yep, Kudos to The Prudent Investor!

  2. The Prudent Investor commented on Nov 13

    I have used the contact form of the Fed and look forward to what reason they will give for the discontinuation of this data series.

  3. Pol commented on Nov 14

    But to be fair, shouldn’t the graph have a logarithmic scale? Doesn’t change the point but does make it look a little less spectacular…

  4. Andy commented on Nov 14

    I think it might be less alarming to overlay the graph with a graph of real GDP, which has also grown from 3T in 1970 to over 11T now. M3 seems to track that pretty well.

    Not that I like comparing anything to GDP (especially the government budget deficit, which has little to do with GDP), but to have a GDP running 11T requires lots of cash.

  5. cm commented on Nov 14

    Andy: That’s a fallacy. It’s not that generating this much GDP requires so much money, but GDP is only so large because of excessive currency. Much of it is hot air. And I wouldn’t put too much faith into how real “real GDP” is.

  6. chris commented on Nov 14

    You should’ve done more research on M3.

    The M3 data has been completely redundant for many years, and was only being released to keep the dataset contiguous. All M3 data is already included in the significantly more useful M2 report.

    Discontinuing M3 was just a question of Fed administrative costs, the data is still 100% transparent.

  7. Idaho_Spud commented on Nov 14


    I beg to politely differ.

    M0: The total of all coins ‘minted’ and paper ‘printed’ cash in circulation. (i.e. currency)

    M1: M0 + the amount in demand accounts (also called “checking account” or “current account”)

    M2: M1 + other various savings account types, money market accounts, and certificate of deposit accounts (CDs) of under $100,000.

    M3: M2 + all other CDs, deposits of eurodollars and repurchase agreements.

    All this comes from Wikipedia (which has an excellent financial section for the layman, BTW)

    M3 contains the all-important repurchase agreement information – where in effect, the Federal Reserve prints money out of nowhere and buys billions worth of federal debt every month.

    When our deficit is out of control and they suddenly stop providing information on how much debt the fed is monetizing, it’s the polar opposite of ‘transparency’.

    If M3 is redundant as you say, then the repurchase agreement numbers contained in the M3 should be available elsewhere… would you be willing to provide an URL?

  8. Brian commented on Nov 14

    Another sign we’re going to inflate our way out of our debt. What’s good stuff to own during inflationary periods? Commodities? Energy?

  9. Solitaire Trader commented on Nov 14

    To M3 or Not to M3?

    Nothing happening in the market today. I suspect there’s going to be a better buying opportunity later in the week, so I’m not going out of my way to buy anything today. A couple of stops were hit in the

  10. Tim commented on Nov 14

    An interesting discussion about M3 over at Silicon Investor – The Epic American Credit and Bond Bubble Laboraty (cool name!):


    Elroy Jetson (probably not his real name) seems to be winning the debate:


  11. chris commented on Nov 14

    Wikipedia may be good for a layman’s understanding, but the fact of the matter is that the M3 definition of eurodollars is inaccurate and driven by data availability, and differences between bank and nonbank institutions (and private and official customers) are significantly less important than they once were.

    The Fed has become 1000% more transparent under Greenspan and appears to be moving even more in that direction under Mr. Bernanke. Conspiracy theories aside, the cessation of M3 publication IS about reducing irrelevant reporting burdens, not some absurd effort to obfuscate fiscal infusions.

  12. Idaho_Spud commented on Nov 15

    “War is Peace”
    “Freedom is Slavery”
    “Ignorance is Strength” George Orwell.

    I’d prefer to be the government continue to publish the M3 (and Repurchase Agreement) data, rather than remain ignorant of it. But to each his own.

  13. canuck hayseed commented on Nov 16

    history repeats itself. The high inflation period of the 70’s was triggered by printing money to pay for the Vietnam War among other factors. Now we have a new war/fiasco and huge budget deficits. At least China will get burned holding so many $US bonds – so there is a bright side.

  14. m3mudpie commented on Apr 21

    M3 is meaningless. It is an incontrovertiable fact. It is mathematically impossible to miss forecasts for GDP, inflation, or interest rates. I.e., money is the measure of liquidity; income velocity is a contived figure; and the rates-of-change and flow of funds data used by the Fed are specious.

  15. fay commented on Jan 14

    Monetizing the debt is what it’s all about! No more M3 reporting allows the process to continue as it always has since 1933, now it will just take place under a larger “veil of secrecy”.

    These folks have no intention of ever allowing us to know what is really going on. The Repurchase Agreement deals are monetizing our debt and we will never know how much or how quickly now that M3 has magically disappeared! Funny how they do things so magically at The Fed! The can create it from thin air and now they can monetize it w/o anyone knowing about it!

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