November 14, 2005
Fed to Start Hiding Econ Data
Fiat currency is a given. Money backed in something tangible like gold or a basket of commodities will not happen in my lifetime. Doing so would restrict government power, something that rarely happens in modern times. Given that we're stuck with central banks printing money at will (but using fancy econometric and macroeconomic theories to support them) investors, consumers, and businesses need to know how much money is being created. The Federal Reserve has decided to no longer publish M3 money supply numbers. M3 covers not only cash but checking accounts (demand accounts in econo-speak), savings accounts, CDs, eurodollar deposits, and repurchase agreements. By manipulating the money supply central bankers attempt to regulate business cycles. Sometimes they do ok (Alan Greenspan) and sometimes they really blow it (the Great Depression). If Ben Bernanke becomes the next Fed chairman he will implement some kind of inflation targeting. Economic actors will be better off knowing how well the Fed is doing with the M3 numbers. Transparency is important. Economic actors won't want to rely solely on the good faith of the Fed, especially with a new Fed chair running the show.
Other great economics and business posts are found at this week's Carnival of the Capitalists hosted by The Entrepreneurial Mind.
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