You know, the Federal Reserve stopped publishing M3 for some strange reason back on 23 Mar 2006.
At the time, they said the following:
M3 does not appear to convey any additional information about economic activity that is not already embodied in M2 and has not played a role in the monetary policy process for many years. Consequently, the Board judged that the costs of collecting the underlying data and publishing M3 outweigh the benefits.
-Federal Reserve web site
hmmm….
The chart below shows the entire data series of M3 from Jan 1960-Feb 2006, measuring y-o-y growth. It’s interesting to note that M3 plummeted around two recessions, 1970 and 1990-91. Year-on-year M3 growth actually went negative only once: 1993.
Notice the huge spikes in M3 in 1970 and 1993. The Fed turned on the afterburners. Their policy was especially inflationary in 1998 and 2000-2001 in order to stave off the Asian contagion and tech wreck of that day. M3 sees a huge downshift during Volcker’s reign (1979-1987), followed by a huge up-shift from 1993 to the tech wreck in 2001.
I wonder what M3 looks like today.
see also: What is Inflation?
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