scottgalvin.com: re: M3. It concerns me when public information steps behind a curtain, but this is just one of many missteps; america's increasing reliance on debt, inflation, social security, and the huge jump in money supply freaks me out, as this is a way to artificially inflate spending and prop up this economy. I hope that a drastic correction won't hurt any viewers of this site. China is currently the largest owner of US bonds (our debt) which is wild. [www.time.com] food for thought - will Greenspan's replacement have an alliance with Bush? John Mccain mentioned on TV tonight that Reagan was asked to OK 84 additions to the US budget - see [en.wikipedia.org] and he turned them all down. Bush has supported over 6,000 this year, including the few million dollar Alaskan highway to nowhere - a large bridge that will connect alaska to an island with 55 residents.
2005-12-11 19:46:40
scottgalvin.com: In these uncertain times, some wisdom: Our lives begin to end the day we become silent about things that matter. - MLK. The future belongs to those who prepare for it today. - Malcolm X. This is your life, and it's ending one minute at a time. - Tyler Durden. Anger is a gift. - Zack de la Rocha
2005-12-11 19:48:19
bouncing: Yes, China is taking Japan's old place as dollar-propper-upper. The reason, of course, is that it benefits their export business. But their continually financing American debt will not be sustainable.
2005-12-11 22:53:50
As of today, I am officially a member of the Lincoln Unitarian church. Six months ago, I never would have imagined it. How life does play with us.
Tonight, I attended not one, but two solstice ceremonies. One was with the congregation of the Unitarian church. The other was with the Order of the Red Grail of Transformational Wicca, whose Full Moon Circles I have been attending for the past couple months. Though both organizations meet in the same building, technically speaking, the Order simply borrows a room from the UU church, who are kind enough to lend it. (It probably helps that one of the Order's senior members has a husband who serves on the Church's board of trustees, but I digress.) I am one of a tiny, tiny few who are involved in both.
I know there's at least one reader who's expressed anticipation (or perhaps hope) that I'll post some sort of detailed narrative about the goings on of the evening. Maybe during the next couple days, I might find the type of mental energy required for such an undertaking. But right now, I don't feel ready to try to force out a detailed description. (Hopefully, the few pieces I communicated to him orally a few minutes ago will suffice for now.)
Part of the reason has to do with way mere words often feel woefully insufficient to convey the true depth of experience. But the other reason is because I'm still not finished celebrating the solstice yet! I left the group ceremonies filled with inspiration and a sense of centered-ness. Now, filled with that focus and direction, I need to direct my energies into solitary communion, as I observe the passing of this sacred night.
So for now, I'll leave it at that, and wish any readers whose thoughts might now also turn to the passing of the ages, or to joy at the rebirth of the Sun God, a merry Solstice, and Blessed Be! The Yule has arrived!
Jeff Vail's latest post brings some light to the recent issue about the Fed's discountinuing of M3 reports on the money supply.
I think that this is CRITICAL, because it is the structural backbone to modern geopolitics.
In short, M0 is the value of all US currency that exists in actual bank notes and coins. M1 is M0+checking accounts. M2 is M1+money market accounts and CD's under $100k. M3 is M2+all larger holdings in the dollar (Eurodollar reserves, larger instruments and most non-European nations' reserve holdings). The key point here is that which will be lost when the Fed stops reporting M3, but continues to report M2 and M1: we will lose transparency on the value of reserve holdings in dollars by other nations and major financial institutions.
And, of course, the timing of the discontinuation of M3 data just happens to coincide with the opening of Iran's euro-denominated oil bourse. Funny how that hasn't exactly been reported at all by ABC, CBS, NBC, CNN, Fox or the other "Main Stream Media" sources.
So what will happen when Iran opens its bourse? They won't just sell Iranian oil (although that alone is a sizeable chunk of world production, roughly 4 million barrels per day, or about 5% of global production). Instead, they will create an entirely alternate derivative market to the exclusively dollar-denominated sale of oil derivatives at the International Petroleum Exchange (London) and the New York Mercantile Exchange. [...]
The result of this is that countries will no longer need to use the US Dollar as their reserve currency. As reserve currency levels drop, the fundamental impact will be a drop in demand for the US dollar. This will result in a decrease in the value of the dollar, but much more importantly it will mean that there is also a decrease in people wanting to purchase US government debt -- the debt that we use to carry huge and consistent budget deficits. Of course, it will still be possible to get other nations to purchase our debt instruments and finance our deficit, but the market will shift the price equilibrium for this debt upward -- that is, the interest rate that we are paying on the national debt will increase significantly.
Suddenly the mysterious Fed is much less mysterious: the M3 statistic that they will stop reporting this Spring is exactly the one that would be used to identify just such a shift in the use of the US Dollar as a reserve currency.