Why The FEDS Are Inflating The Dollar

[Nbadan]

http://www.markswatson.com/m31102.gif


"The U.S. government has a technology, called a printing press - or today, its electronic equivalent - that allows it to produce as many U.S. dollars as it wishes at essentially no cost," - Federal Reserve Governor Ben Bernanke

The Federal Reserve has been printing money like there is no tomorrow and
yet financial pundits on the Major Financial networks act as though this is simply not important enough to report.

Credit must be given to CNBC that did for once let the truth leak onto the airwaves in an interview with Paul O'Neill, US Treasury Secretary when asked about these deficits and our ability to service them. He said in essence, that the financial system will fall apart when we can no longer service our debt. And still, very little is heard about America's missing trillions of dollars that no one can account for and no one is investigating. What is happening in America reads like a horror story that is not reported to the people at large who are given large doses of propaganda to keep them content and under control while they are being fleeced on a scale that has never happened before in history.

Indeed the Social Security trust fund has been raided by Congress and the Administration in order to pay for the last few years of Government spending and the luxury of lying to Americans by telling them we had a budget surplus. So a crash like in 1929 is probably not in the cards, instead will be something very different and much more destructive. These news is extremely bleak, yet if one listens to the newsmen on TV, one would think everything is just 'coming up roses'. The real barometer of economic health will be the status of the US dollar, and how much foreign investment actually leaves the US in the coming months. Another barometer will be the true state of US employment, how many people will be working for the government in the coming months, how many have taken pay cuts after getting laid off in the private sector and must find work at jobs that cannot support their lifestyles and prior purchasing patterns.


But money is being created everywhere! Hell, the U.S. Treasury spent last week printing up another $5.4 billion in actual cash! Even M3, the measure of the money supply that is so broad that it includes everything that could possibly be considered as "money," jumped $70 billion dollars in the last four stinking weeks! No wonder the banks and the government are not going to report this statistic anymore, as it is proof positive that the dollar is being murdered! - The Mogambo Guru

The US government released its trade figures in February that showed a marked deterioration in our trade position in that the US was able to rack up a trade deficit of $726 billion, which as perilously close to one trillion dollars in one single solitary year (2005). The one word that can sum up this situation is this; unsustainable.



The ships are usually fully laden when they leave the Far East and head farther east to the West, but relatively little cargo heads in the other direction. Ships sometimes sail from U.S. ports half-empty: a graphic illustration of the imbalance of trade, and a discrepancy reflected in the price. Sending a container from Shanghai to Hamburg can cost over $2,000; the return journey may be had for less than a tenth. - Der Spiegel

The real problem is that Gobalization is doing what many have wanted it to do all along, equalize the world and its business environments, including and especially wages and benefits for the world's laborers. This is forcing those in the west to do one of two things; move their industries overseas or reduce overall compensation packages for its workers. The US has tried to ease the pain of globalization with irresponsible money creation, putting enormous pressure on its dollar in order to maintain consumption. This tactic has worked fairly well until now but the trend will have to change.

How have these inflows changed? There is less and less transparency these days as to who is actually buying our notes. But one key source has been OPEC3. These largely Arab nations have put billions into our T-bills and now that we need this source of borrowing, the Arabs appear to want something in return. This looks like a quid-pro-quo to this author insofar as that in exchange for these inflows, they get key pieces of American infrastructure of which the ports that bring in all of the goods America consumes is pivotal. Proof? None. However, why would the President allow nations (any nation) buy up such an important and truly vital part of America? Did you know our troops equipment gets shipped from these ports? These ports are absolutely critical to America and Bush wants to sell it them to a foreign government? This man should register as a foreign agent.

The Fed will try to inflate us out of our budgetary dilemma. They have already done what is necessary to hide this from you and me. Once the printing press cranks up in earnest it will be impossible to hide. Everything will go up in price, including and most notably energy. This is what investors are afraid of because if inflation is running at about 8% annually and an investor is only earning 4% on a US Government note, their investment is not really appreciating. Rather, it is depreciating at a rate of 4% a year in terms of its purchasing power.

Thus, we can see the dilemma the Fed is in and at least one of the reasons why Greenspan is probably not crying too many tears over leaving the Fed now. The US economy is in trouble and he is more than a little to blame for it. The inflationary scenario is in my estimation the most likely to transpire. While others seem to think deflation is not a threat to the economy if it ever happened, I and almost any reputable economist (which I am not) will tell you what deflation does to an economy. It closes industries and puts millions out of work when profits turn into losses because goods must sell for considerably less than the production costs associated with their manufacture. Both paths lead to a painful 'death' but inflation is somewhat less painful than the alternative because the means of production is not typically destroyed.

Mark Watson (http://www.markswatson.com/PESR1.html)

[Nbadan]

No, the Iran Oil Bourse is not a casus belli…

The F-16 dollar backing


Since 1979 the US power establishment from Wall Street to Washington has maintained the status of the dollar as unchallenged global reserve currency. The role, however, is not a purely economic one. Reserve currency status is an adjunct of global power, of the US determination to dominate other nations and the global economic process. The US didn’t get reserve currency status by a democratic vote of world central banks, nor did the British Empire in the 19th Century. They fought wars for it.

For that reason, the status of the dollar as reserve currency depends on the status of the United States as the world’s unchallenged military superpower. In a sense, since August 1971 the dollar is no longer backed by gold. Instead, it is backed by F-16’s and MI Abrams battle tanks, operating in some 130 US bases around the world, defending liberty and the dollar.

A Euro challenge?

In order for the Euro to begin to challenge the reserve role of the US dollar a virtual revolution in policy would have to take place in Euroland. First the European Central Bank, the institutionalized, undemocratic institution created by the Maastricht Treaty in order to maintain the power of creditor banks in collecting their debts, would have to surrender power to elected legislators. It would then have to turn on the Euro printing presses and print Euros like there was no tomorrow. That is because the current size of the publicly-traded Euroland government bond market is still tiny in comparison with the huge US Treasury market.

As Michael Hudson explains in his brilliant and too-little studied work, ‘Super Imperialism,’ the peverse genius of the US global dollar hegemony was the realization, in the months after August 1971, that US power under a fiat dollar system was directly tied to the creation of dollar debt. The debt and US trade deficit was not the ‘problem,’ they realized. It was the ‘solution.’

The US could print endless quantities of dollars to pay for foreign imports of Toyotas, Hondas, BMW’s or other goods in a system in which the trading partners of the USA, holding paper dollars for their exports feared for a dollar collapse enough to continue to support the dollar by buying US Treasury bonds and bills. In fact in the thirty years since abandoning gold exchange for paper dollars, the US dollars in reserve have risen by a whopping 2,500% and grows at double-digit rates today.

This system continued into the 1980’s and 1990’s unchallenged. US policy was one of crisis management coupled with skilful and coordinated projection of US military power. Japan in the 1980’s, fearful of antagonizing its US nuclear umbrella provider, bought endless volumes of US Treasury debt even though they lost a King’s ransom in the process. It was a political, not an investment decision.

The only potential challenge to the reserve role of the dollar came in the late 1990’s with the European Union decision to create a single currency, the Euro, to be administered by single central bank, the ECB. Europe appeared to be emerging as a unified, independent policy voice of what Chirac then called a multi-polar world. Those multi-polar illusions vanished with the unpublicized decision of the ECB and national central banks not to pool their gold reserves as backing for the new Euro. That decision not to use gold as backing came amid a heated controversy over Nazi gold and alleged wartime abuses by Germany, Switzerland, France and other European countries.

Since the shocks of September 11, 2001 and the ensuing declaration of a US global War on Terror, including a unilateral decision to ignore the United Nations and the community of nations and go to war against a defenceless Iraq, few countries have even dared to challenge the dollar hegemony. The combined defense spending of all nations of the EU today pales by comparison to the total of current US budgeted and unbudgeted defense spending. US defense outlays will reach an official, staggering level of $663 billion in the current Fiscal 2007 year. The combined EU spending amounts to a mere $75 billion, with tendency declining, in part owing to ECB Maastricht deficit pressures on its governments.

So today, at least for the present, there are no signs of Japanese, EU or other dollar holders engaging in dollar asset liquidation. Even China, unhappy as she is with Washington bully politics, seems reluctant to rouse the American dragon to fury.

The Origins of the Oil Bourse

The idea of creating a new trading platform in Iran to trade oil and to create a new oil benchmark crude apparently originated with the former Director of the London International Petroleum Exchange, Chris Cook. In a January 21 article in the Asia Times, Cook explained the background. Describing a letter he had written in 2001 to the Governor of the Iranian Central Bank, Dr Mohsen Nourbakhsh, Cook explained what he advised then:

‘In this letter I pointed out that the structure of global oil markets massively favors intermediary traders and particularly investment banks, and that both consumers and producers such as Iran are adversely affected by this. I recommended that Iran consider as a matter of urgency the creation of a Middle Eastern energy exchange, and particularly a new Persian Gulf benchmark oil price.

’It is therefore with wry amusement that I have seen a myth being widely propagated on the Internet that the genesis of this "Iran bourse" project is a wish to subvert the US dollar by denominating oil pricing in euros.

’As anyone familiar with the Organization of Petroleum Exporting Countries will know, the denomination of oil sales in currencies other than the dollar is not a new subject, and as anyone familiar with economics will tell you, the denomination of oil sales is merely a transactional issue: what matters is in what assets (or, in the case of the United States, liabilities ) these proceeds are then invested.’

A full challenge to the domination of the dollar as world central bank reserve currency entails a de facto declaration of war on the ‘full spectrum dominance’ of the United States today. The mighty members of the European Central Bank Council well know this. The heads of state of every EU country know that. The Chinese leadership as well as Japanese and Indian know that. So does Vladimir Putin.

Until some combination of those Eurasian powers congeal in a cohesive challenge to the unbridled domination of the USA as sole superpower, there will be no Euro or Yen or even Chinese Yuan challenging the role of the dollar. The issue is of enormous importance, as it is vital to understand the true dynamics bringing the world to the brink of possible nuclear catastrophe today.

As a small ending note, a good friend in Oslo recently forwarded me an article from the Norwegian press. At the end of December, Sven Arild Andersen, Director of the Oslo Bourse, announced he was fed up with depending on the London oil bourse trading oil in dollars. Norway, a major oil producer, selling most of its oil into Euro countries in the EU, he said, should set up its own oil bourse and trade its oil in Euros. Will NATO member Norway become the next target for the wrath of the Pentagon?

Global Research (http://www.globalresearch.ca/index.php?context=viewArticle&code=%20EN20060310&articleId=2076)

The strength of the dollar is backed by the strength of the U.S. Military. In effect, when the U.S. invades defense-less countries like Iraq, it reinforces the dollars strength by legitimazing it's role as the petro-currency of choice by other nations. More demand for dollars means the U.S. Treasury can keep the monetary printing press running full speed, after all, who the wiser? Certainly not the world monetary markets, all they see is more and more dollars being put into their collective coffers. Certainly not Wall Street, all they see is more and more dollars pumped into investments and their related 'fees'. Certainly not the treasury, it's their job to do as the WH says, and if the WH says prime the presses, they prime the presses. Certainly not the WH, they can keep on deficit spending and we can all keep on pretending that the economy is growing at a healthy pace.

However, the problem with inflation isn't just high intrest rates for consumers, as Paul Volkner showed in the 70's, this may be the solution to keeping the dollar the petro-dollar of choice and slowly nurse it back to health, the real problem is when you reach a point where too many dollars start chasing too few goods - your money becomes worthless.

[Cant_Be_Faded]

I'll give you a topic: The Federal Reserve is neither federal nor does it really hold anything in reserve. Talk amongst yourselves.

[smeagol]

I'll give you a topic: The Federal Reserve is neither federal nor does it really hold anything in reserve. Talk amongst yourselves.
:lol

Cant_Be_Faded can be funny!

[Peter]

Whoa. Lefties spinning Fed conspiracy theories. I think I've seen it all now.

[Cant_Be_Faded]

are you implying that its a conspiracy to say the fed isn't federal

[Peter]

The Fed is charted by the US govt and of course the pres gets to nominate the Chairman and Vice-Chairmen of the Board of Governors. There are member banks who "own" a piece as part of being a member bank. This is a point often alluded to by conspiracy theorists. Anyways, it's usually right-wing nutjobs who rail against the Fed for its "printing press" mentality.

[Cant_Be_Faded]

The Fed is charted by the US govt and of course the pres gets to nominate the Chairman and Vice-Chairmen of the Board of Governors. There are member banks who "own" a piece as part of being a member bank. This is a point often alluded to by conspiracy theorists. Anyways, it's usually right-wing nutjobs who rail against the Fed for its "printing press" mentality.


why do you put "own" in italics? do they own it or own it? or do they not?

Also, how much do member banks "own" (own?) ?

[Peter]

They are given "shares" but they can't trade them and they don't get any $ from those. That goes back to the treasury.

It's certainly closer to being a true federal agency than, oh, say Fannie Mae or Sallie Mae.

[Nbadan]

SPEAKING FREELY
The spiraling costs of Uncle Sam's deficits
By Peter Morici


The US Commerce Department recently released figures reporting that the United States' current-account deficit for 2005 was US $804.9 billion, up from $668.1 billion in 2004. The current account is the broadest measure of the US trade balance. In addition to trade in goods and services, it includes income received from US investments abroad, less payments to foreigners on their investments in the United States.

In the fourth quarter, the current-account deficit was $224.9 billion, up from $185.4 billion in the third quarter. In the fourth quarter, the current-account deficit exceeded 7% of gross domestic product (GDP). The current-account deficit could easily top $1 trillion a year by the second half of 2006.

Separately, the Commerce Department has reported that retail sales were down 1.3% in February, indicating that a consumer pullback is beginning. The combination of slower-growing consumer spending and a widening trade gap will dampen US economic growth by mid-year. Real GDP growth will likely be about 3.8% in the first half and 3.3% in the second half.

Among US corporates, slower second-half growth will hit Ford and General Motors particularly hard. Consumers will become more value-conscious in vehicle selection, and this will play into the strengths of Asian, and in particular Korean, brands. Ford and GM are not well positioned with attractive, smaller and reliable vehicles in the value segments of the market. Among these companies' offshore brands, Mazda is best positioned.

Anatomy of the hemorrhaging current account

In 2005, the United States had a $1.6 billion surplus on income flows and a $58.0 billion surplus on trade in services. Even together, however, these were hardly enough to offset the massive $781.6 billion deficit on trade in goods.

The trade deficit for petroleum products was $229.2 billion last year, up from $163.4 billion in 2004, reflecting the fact that prices for imported petroleum had risen about 36% from 2004, while the volume of imports fell 2%. The US appetite for inexpensive imported consumer goods and cars was a huge factor driving the trade deficit higher. In 2005, the deficit on non-petroleum goods was $537.2 billion, up from $487.6 billion in 2004.

Imports of motor-vehicle parts increased 10% to $83 billion, as Ford and GM continue to push their procurement offshore and cede market share to Japanese and Korean companies offering vehicles that were better made and less expensive to own. Even when they assemble automobiles in the United States, Asian auto makers import more parts than Ford and GM do.

In addition, the Wal-Mart effect was broadly apparent. The trade deficit with China was $201.7 billion last year, a new record. This was up from $162.0 billion in 2004.

This situation is likely to become worse in the months ahead. Crude-oil prices are rising again, and an overvalued US dollar continues to keep imported cars and consumer goods cheap. Announced production cutbacks at GM and Ford will result in more imports of motor vehicles and parts.

Meanwhile, the dollar remains at least 40% overvalued against the Chinese yuan and other Asia currencies. China continues to peg its currency against the dollar. Although China revalued the yuan from 8.28 to 8.11 in July, and announced it would adjust the currency's value to a basket of currencies, the yuan continues to track the dollar very closely. Currently it is trading at 8.04.

Other Asian governments conform their currency policies to China's, lest they lose competitiveness in US and European markets. To sustain undervalued currencies against the dollar, foreign governments purchased $220.7 billion in US securities in 2005. This created an 11% subsidy on their exports to the United States.

Consequences for economic growth

High and rising trade deficits tax economic growth. Specifically, each dollar spent on imports that is not matched by a dollar of exports reduces domestic demand and employment, and shifts workers into activities where productivity is lower. Productivity is at least 50% higher in industries that export and compete with imports, and reducing the trade deficit and moving workers into these industries would increase GDP.

Were the trade deficit cut in half, GDP would increase by nearly $300 billion, or about $2,000 for every working American. Workers' wages would not be lagging inflation, and ordinary working Americans would more easily find jobs paying good wages and offering decent benefits.

Manufacturers are hit particularly hard by this subsidized competition. Through recession and recovery, the manufacturing sector has lost 3 million jobs. Following the pattern of past economic recoveries, the manufacturing sector should have regained about 2 million of these jobs, especially given the very strong productivity growth accomplished in durable goods and throughout manufacturing.

Longer-term, persistent US trade deficits are a substantial drag on growth. US import-competing and export industries spend three times the national average on industrial research and development (R&D), and encourage more investments in skills and education than other sectors of the economy. By shifting employment away from trade-competing industries, the trade deficit reduces US investments in new methods and products, and skilled labor.

Cutting the trade deficit in half would boost US GDP growth by 25% a year. These effects of lost growth are cumulative. Thanks to the record trade deficits under President George W Bush, the US economy is about $1 trillion smaller. This comes to nearly $7,000 per worker.

Had the Bush administration and the Congress acted responsibly to reduce the trade deficit, American workers would be much better off, tax revenues would be much larger, and the federal deficit would be about half its current size.

Were the trade deficit cut in half, $2,000 would be recouped, but $5,000 per worker in lost growth is in essence lost forever. And the damage grows larger each month, as the Bush administration and the Congress dally and ignore the corrosive consequences of the trade deficit.

Peter Morici is a professor at the University of Maryland's Robert H Smith School of Business, and a commentator on economic and political issues.
Asia Times (http://www.atimes.com/atimes/Global_Economy/HC17Dj01.html)

[RandomGuy]

I'll give you a topic: The Federal Reserve is neither federal nor does it really hold anything in reserve. Talk amongst yourselves.


:lol

Ok, THAT was funny. You have this nerds admiration. :lmao

[Cant_Be_Faded]

I aim to please.

[Nbadan]

Warren Buffet isn't one of the richest men in the U.S. for nothing...


(snip) "It's the consumer's action in the end that is doing it, but we have no governmental policy that counters the fact we are sending a couple of billion dollars a day abroad. We are trading -- we are buying goods and we are selling capital," he said.

CNN (http://money.cnn.com/2006/03/20/news/newsmakers/buffett_dollar.reut/index.htm?cnn=yes)

http://www.kentucky.com/images/kentucky/kentucky/14145/200082169745.jpg

[Nbadan]

FED Governor Ben S. Bernanke THEN...


What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

--

Federal Reserve Chairman Ben Bernanke TODAY...


"Although U.S. trade deficits cannot continue to widen forever, these deficits need not engender a precipitous decline in the dollar, nor should such a decline, were it to occur, necessarily disrupt financial markets, production or employment," Bernanke said in a letter to Rep. Brad Sherman, a California Democrat.

REUTERS (http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-03-21T233026Z_01_N21342616_RTRIDST_0_ECONOMY-BERNANKE-UPDATE-1.XML)

Nothing to see here folks, move along.

:hat

[scott]

Those two statements are not in conflict with one another, so I fail to see your point.

[Nbadan]

Those two statements are not in conflict with one another, so I fail to see your point.

Then you don't see the relationship between dollars and trade. While other countries are exporting goods to the U.S., the U.S. is exporting dollars. If the trade deficit continues to increase, as expected, the number of dollars the FEDS have to print to keep up also increases, which remains in equilbrium as long as the dollar remains in demand as the sole bases for oil purchases world-wide, but any threat to the U.S. as the sole police-man around the globe, or any other action that threatens the value of the dollar now has world-wide implications.

This is one reason I expect a us to bomb Iran anytime after March 28th. The U.S. must increase it's influence on control of energy because that is how we 'fatten our national wallets', so to say, this way we can absorb greater and greater borrowing. Think of it this way, the more assests we control, either through outright thievery, as in Iraq, or through threat, intimidation, and war, as in Iran, soon, the greater the value of the dollar because it puts other countries on notice that if they don't play Washington's economic game, they could lose control of their assets.

[scott]

Then you don't see the relationship between dollars and trade. While other countries are exporting goods to the U.S., the U.S. is exporting dollars. If the trade deficit continues to increase, as expected, the number of dollars the FEDS have to print to keep up also increases, which remains in equilbrium as long as the dollar remains in demand as the sole bases for oil purchases world-wide, but any threat to the U.S. as the sole police-man around the globe, or any other action that threatens the value of the dollar now has world-wide implications.

This is one reason I expect a us to bomb Iran anytime after March 28th. The U.S. must increase it's influence on control of energy because that is how we 'fatten our national wallets', so to say, this way we can absorb greater and greater borrowing. Think of it this way, the more assests we control, either through outright thievery, as in Iraq, or through threat, intimidation, and war, as in Iran, soon, the greater the value of the dollar because it puts other countries on notice that if they don't play Washington's economic game, they could lose control of their assets.

Dan, I understand economics - probably a lot better than you do. What I don't understand is the point of your "then - now" post.

[Nbadan]

The Discontinuance of the reporting of the M3 money supply has begun...


Release Date: November 10, 2005, revised March 9, 2006

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).

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 (http://www.federalreserve.gov/releases/h6/discm3.htm)

but, that's not what critics of the new FED policy are saying...


History has shown that only failing economies e.g. Soviet Union keep data secret (Financial Sense - Toni Straka - Unpleasant M3 Trend, November 12, 2005). An interesting premise and a theme we saw woven amongst a number of writers is that they have something to hide. The claim is that the Fed should be transparent and by not publishing the number the Fed now lacks transparency.

"The end of publishing of M3 in March 2006 coincides with the start of the Iranian Oil Bourse. The premise here is that the with the oil bourse trading in Euros there will be a rush out of US$ into Euros and that M3 could drop sharply. A sharp drop in M3 would of course presage a recession as falling M3 is a characteristic of weak economic periods.

"M3 is a measure of inflation in the economy. A somewhat unproven rule of thumb is GDP + inflation = M3. Will be able to properly measure inflation going forward if we don't know what M3 really is."

GOLD EAGLE (http://www.gold-eagle.com/editorials_05/chapmand112205.html)

[RandomGuy]

Hmmm, the money supply was increasing by 9% over a two year period in which the economy was tanking.

I will now meditate on this.

[Nbadan]

I guess you meditated to hard and fell asleep. :lol

HR 4892 (http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.4892:) was introduced by Congressman Ron Paul on March 7, 2006:


To require the Board of Governors of the Federal Reserve System to continue to make available to the public on a weekly basis information on the measure of the M3 monetary aggregate, and its components, and for other purposes.

Paul defined the three levels of money as:


SEC. 2. M3 MONETARY AGGREGATE REQUIRED TO BE PUBLISHED WEEKLY.

(a) In General- Notwithstanding the announcement by the Board of Governors of the Federal Reserve System on November 10, 2005, the Board of Governors of the Federal Reserve System shall continue, after March 22, 2006, to compile and to publish on a weekly basis the measure of the M3 monetary aggregate and the components of the M3 that are not included in the measure of the M2 monetary aggregate.

(b) M3 Monetary Aggregate Defined- For purposes of this section, the term `M3 monetary aggregate' means the inclusive measure of money compiled by adding the following:

(1) M1 COMPONENTS- Currency in circulation (plus traveler's checks), demand deposits, Negotiable Order of Withdrawal (NOW) accounts, and similar interest-earning checking account balances.

(2) THE NON-M1 COMPONENTS OF M2- Household holdings of savings deposits, small time deposits, and retail money market mutual fund balances (exclusive of balances held in IRA and Keogh accounts).

(3) THE NON-M2 COMPONENTS OF M3- Institutional money market mutual fund balances and managed liabilities of depositories consisting of large time deposits, repurchase agreements, and Eurodollars.

According to the most recent data (https://research.stlouisfed.org/fred2/data/M3.txt) as of March 13, 2006, M3 had been growing at an annual rate of about 7.5%. The European Central Bank (http://www.ecb.int/home/html/index.en.html) has set a target rate of 4.5% for M3 growth but has overshot that target by almost double since the inception of the Euro.

[Nbadan]

Ok, after some number crunching here is what I got - in Dubya's 6 years in office, M3 has increased by a average yearly rate of 6.935%, including an incredible 8.6% and 9.56% his first two years in office, despite the recession. Clinton averaged a 8-year average growth of only 4.59%. In the 10 years preceeding Clinton, M3 grew by an average rate of 5.42%.

[Winehole23]

what are your ideas about money supply and dollar inflation now, Dan? just curious.