Federal Reserve stops publishing M3
On March 23, 2006, the Federal Reserve ceased publishing the M3 money-supply aggregate, citing cost-benefit reasons. M3 included M2 plus institutional money-market funds and large time deposits — the broadest measure of U.S. dollars in circulation. The Fed continued to publish M1 and M2 but stopped tracking the aggregate that had historically grown fastest during periods of financial engineering and shadow-banking expansion. Analysts immediately noted that the discontinuation removed the most visible measure of monetary aggregate growth just as the housing and credit bubbles were approaching their peak.
Private analysts (most famously John Williams of ShadowStats) have continued to reconstruct M3 from underlying Federal Reserve and FDIC data. The reconstructed series has grown substantially faster than M2 in many years, suggesting the 2006 discontinuation did in fact remove a measure that would have shown faster monetary expansion than the remaining aggregates do.
06 · Modern Fiat Failures
With gold constraints gone entirely, currency debasement became a recurring feature of emerging-market economics. Argentina replaced its currency five times between 1970 and 1992, each time lopping off zeros and re-starting. Brazil did similar serial redenominations. Yugoslavia, Zimbabwe, and the post-Soviet states produced spectacular hyperinflations. Meanwhile, major central banks learned to hide their monetary expansion in increasingly technical mechanisms — money-supply measures were redefined, reporting requirements were relaxed, and the Federal Reserve stopped publishing M3 entirely in 2006.
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