Stimulus/Bailout Total Exceeds Total US Money Supply

Let me preface this posting by saying that I am no economist and that economics can be about as easy to understand as NASA telemetry data but I've been doing some research and here is what I found:

The Federal Reserve publishes two yearly reports on the total money supply in the US, these are known as the M1 and M2 (they stopped reporting the M3 data in 2006). Here is a little information from the Fed on these two reports:

M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) traveler's checks of nonbank issuers; (3) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (4) other checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts, and demand deposits at thrift institutions. Seasonally adjusted M1 is constructed by summing currency, traveler's checks, demand deposits, and OCDs, each seasonally adjusted separately.

M2 consists of M1 plus (1) savings deposits (including money market deposit accounts); (2) small-denomination time deposits (time deposits in amounts of less than $100,000), less individual retirement account (IRA) and Keogh balances at depository institutions; and (3) balances in retail money market mutual funds, less IRA and Keogh balances at money market mutual funds. Seasonally adjusted M2 is constructed by summing savings deposits, small-denomination time deposits, and retail money funds, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.

In other words, we would find out what the current money supply in the US is by looking at the total of the M2 report. The latest M2 report from the Federal Reserve Bank details the information for February of 2009 and lists the total at:

8275.4 Billion dollars which, by US conversion, is a little over $8 trillion dollars.

Now, according to Bloomberg.com the Stimulus and Bailout pledges as of February 2009 totals:

$11.6 Trillion Dollars

That leaves us with a bill that is $3.6 Trillion Dollars MORE than our entire money supply for the entire country, or roughly 50% more than all the money we have.

Now, I could be wrong in the way I interpreted this data, in which case I will be very happy to be wrong.

But if you were worried about the Fed and the Banking Cartels bleeding the US dry it seems that it might already be too late. How on Earth are we going to pay off a bill that is greater than all the money we have? This is basically a macro cosmic version of what happens when someone needs to declare bankruptcy because they ran up credit card bills in excess of what they're able to earn!

Now, when you take into account the idea that inflation is really the devaluation of the dollar based on an increased number of dollars relative to the worth of what backs it ( the money is fiat and therefore backed only by the value of the US, it's lands, industry, real estate and people ) it seems that we are looking at a devaluation of the dollar by at least 50%!

In other words, your dollar is now worth .50 cents and everything you buy will double in price.

Sources:

Federal Reserve M1 and M2 Reports for 2009

Bloomberg Report on Stimulus/Bailout Total

[edit on 21-3-2009 by Shadowflux]

In the above post I mentioned the Fed's cessation of the M3 aggregate report. Well, there's more to it than simple cessation. When the Fed announced that it would no longer produce the M3 report ( basically the M1 report plus the M2 report with additional factors added to the total) there was one man fighting to stop it.

That man was none other than our friend Ron Paul who introduced HR 4892. In this March 10, 2006 interview with Mr. Paul he elaborates on his concern over the report's cessation and his doubts as to the Fed's reasoning behind it. Here are a few excerpts from that interview:

So you think M3 is valuable as a measure of money supply?

I realize the shortcomings of some of these numbers, and M3 isn't an answer to all the information that we would like. But it's better than not having it. I think it does represent a reflection of Federal Reserve policy. For them to quit reporting it you have to ask, why?

The Fed reportedly stated that it cost too much to create the M3 report, which to anyone with even a simple understanding of the Fed's role would seem a ridiculous reason as Mr. Paul states:

Ok--we'll bite. Why?

I don't know exactly why, but the Fed gives answers. They claim that it costs too much money and they don't use M3 any more. My argument to [Fed Chairman] Bernanke the other day was: some of us like M3, and Congress has a right to this type of information. There are still a few people in the country that think money supply's important, and M3 is a reflection of money supply. I mentioned that there are a few economic schools of thought that are still concerned about M3, although some deny it has any value.

The most interesting thing was when he said it cost too much to collect [the data for compiling M3]. I kid the Fed about that, and say, I don't why you should be concerned about it. If you need to spend money you just print it.
(emphasis mine)

Here is Mr. Paul on why the Fed would want to cease producing the M3 report:

I think this denial of the M3 information is just another effort to direct attention to the Congress, or the Arabs charging too much for oil, or the price of education going up too much, or the cost of medical care rising too fast. The Fed wants to direct your attention away from the real culprit: the creation of money and credit.

And here is my personal favorite quote from the interview:

What do you think the Fed should be doing these days?

Ultimately, I wouldn't even have a Federal Reserve system, because you don't need one. Even Friedman, with his monetarism, thinks we shouldn't have a Federal Reserve manipulating interest rates.

The situation we currently find ourselves in has been in the works for quite some time and it becomes more obvious with each passing day.

EDIT: Here is the information on bill HR 4892 from govtrack.us

This bill never became law. This bill was proposed in a previous session of Congress. Sessions of Congress last two years, and at the end of each session all proposed bills and resolutions that haven't passed are cleared from the books. Members often reintroduce bills that did not come up for debate under a new number in the next session.

[edit on 21-3-2009 by Shadowflux]

Thank you very much for this thread. You have shown inflation in it's most simple form. S&F.

reply to post by Anonymous Avatar


Thank you for your attention to my thread. Here is some more information regarding inflation:

Inflation can also be described as a decline in the real value of money—a loss of purchasing power in the medium of exchange which is also the monetary unit of account.[3] When the general price level rises, each unit of currency buys fewer goods and services. A chief measure of price inflation is the inflation rate, which is the percentage change in a price index over time.
(emphasis mine)

In other words, Inflation is really Devaluation of the Dollar. Inflation is caused by an increase in the total number of dollars in our economy, when more dollars are pumped into the economy the relative value, or purchasing power, of the dollar drops. We see this effect in the real world as the "Inflation", or increasing, of the price of products and services we buy with our dollars.

I once explained it using what I call the "Twinkie Example". Twinkies used to cost .99 cents a pack (generally two Twinkies), however, Twinkies recently changed their price per pack to $1.19. This represents a 20% increase, or inflation in the price of Twinkies. This can also be viewed as a 20% DECREASE in the value, or purchasing power of the Dollar. I admit this example is overly simple but I believe it's still a good explanation.

reply to post by 12m8keall2c



I would have to say that I, and it seems Mr. Paul, would have to agree with you. Given the nature of the report and the timing of the Fed's decision, the cessation of the M3 aggregate served no other purpose than the intentional blinding of the populous to what was really going on.

In the cited interview its mentioned that the M3 was growing at roughly double the rate of the M2. If this is the case then how can the Fed proclaim that the M3 is a redundancy of the M2??

Here is Mr. Paul's response to the doubled growth:

I asked the same question to Bernanke, and he totally ignored it. I said, M3's growing twice as fast as M2. And the change in the growth is important too. A couple of years ago M3 wasn't growing quite as fast, and in the last eight or nine months it's accelerated.

I think it's a safe bet to say that if the M3 was still produced it's total would be much higher than the current M2 for this month. I think it's impossible that the Stimulus and Bailout totals would exceed the totals for the M2. I mean, how can we be giving out more money than we actually have?

Given the fact that the Fed knew the growth of the M3 had accelerated in a time frame of about 9 months I think it's safe to say that the Fed knew we were headed for major economic trouble and the only thing they did was to stop telling us.

Originally posted by Shadowflux
I think it's a safe bet to say that if the M3 was still produced it's total would be much higher than the current M2 for this month. I think it's impossible that the Stimulus and Bailout totals would exceed the totals for the M2. I mean, how can we be giving out more money than we actually have?

[edit: speeling]

[edit on 21-3-2009 by 12m8keall2c]

So... should we spend our money and get actual stuff? Or keep the money?

There’s only one way to end this unchecked corruption, we need to paralyze the U.S. Federal Puppet Government and its GREEDY Illuminati handlers.

Passive resistance is our only hope.

Study the extremely effective techniques that Mahatma Gandhi (en.wikipedia.org...) employed against the Illuminati, and begin applying them in your community TODAY!



[edit on 22-3-2009 by seasoul]

reply to post by die_another_day


While not wanting to give bad advice nor pretend to be completely correct I would say that necessities are always a good investment. It's never a bad idea to have a reserve stock of canned food, cigarettes, water, anything you think you'll miss if the stores are empty.

But I'm not trying to cause a panic nor am I implying in anyway that "this is it". Just get ready to pay a lot more for everything than you are now, unless of course, something good happens.

I must admit that I have no stockpiles, I've been broke a lot longer than most of the recently unemployed.

It is what it is, as my dad always says. These are the times we live in, we just have to take it a day at a time and remember what is truly valuable in life, those that we love and the time we spend with them.

Good one, Shadow. Very astute observation.
Starred and flagged.

Originally posted by Shadowflux

It is what it is, as my dad always says. These are the times we live in, we just have to take it a day at a time and remember what is truly valuable in life, those that we love and the time we spend with them.

Well said, and indeed, do the best we can with what we have!

As to the Fed and the report...there is a sinister reason behind their actions...

Change is a constant whether perceived or not; but only when we see it do we believe it has occurred. Then, it is too late.

reply to post by burntheships


The main reason behind keeping the M3 aggregate information secret is, as Ron Paul stated, to keep the true rate of inflation a secret and to keep the populous blaming scapegoats such as OPEC or mis-managed unregulated banking giants.

When those we choose to represent us and act on our behalf for our benefit begin to act in secret to our detriment I would indeed agree that it is sinister.

Lets simplify the concept.

You have a financial universe the size of a box of 100 cookies.
The box of cookies is worth 100 dollars.
There are 100 dollars in circulation with which to by the cookies.

The world is in harmony, 90 people have 1 dollar each and the bankers have 10 to loan.

Then the bankers dump 150 more dollars into the mix, giving them 160 dollars to loan, to save the economy.

The cookies are still the only commodity in the universe, so they are now worth 2.50 each, once the dollars are loaned. You understand there are real things and the dollars to buy them.

If they print one new dollar for every-dollar anyone owns, then every one you own is worth half.

They dumped 150% into the cash pool, So now you must borrow 1.50 from the banker and add it to the one you already have in order to by the cookie you could have bought yesterday for your 1 dollar. Or that will be the case once the money starts to flow.

Which is to say that they just gave themselves 75% of everything you own, and you cannot afford to do anything but sell the remainder of most of what is left to them in a fire sale. Or enslave yourself to get the cookie you already worked so hard for, the cookie you already earned.

No cookie for you fat boy! The bankers just ate your lunch.

Debt is slavery, and we have all just been enslaved. Anything you ever thought you saved, or invested in, what has not already been taken in the crash, has in large measure been stolen.

You say you own a piece of land which was worth 100,000 dollars and now it must be worth 250,000 and you are going to be much better off when the money starts to flow? When the new hyper inflated realty sets in because the new money starts to go into circulation.

No, Although you own the land, the banker has 150,000 dollars of it's worth with which to buy it up from those forced out of their holdings.
The money goes into circulation by buying up anything worth having from those squeezed by the economy.

Even if you own it outright, who can you sell it to but the banker at his fire sale price? This is the nature of economic recovery. Those with the cash can buy up the posessions of the rest.

The best thing you can do before the hyper inflation sets in is owe the bank big time!

If you can be one of the first in line to become enslaved you can buy the land for 100,000 dollars, 10k cash down, owe 90,000 dollars to the bank, and pay off the debt with money which has been diluted 150%.

This of course presumes a lot, and you are only a relatively better off slave. Still a slave. Just at a better exchange rate.

I have always hated paying interest for anything and avoid it like the plague! I have always made double payments on the mortgage for my house. I no longer do that. I now wish to owe the bank as much as possible in todays dollars. In a couple of years as the economy comes back, those dollars will become laughably small compared to the cost of anything. I may be able to pay off my debt for the price of a loaf of bread, if inflation spirals out of control; if I can still afford a loaf of bread.

[edit on 22-3-2009 by Cyberbian]

Not disclosing that M3 report was quite big news here in Europe. Most goverments were extremely pissed off about it, and USA basically said that they do produce it allright but that too few people wanted it to warrant the cost. I'm not sure if people in USA were told the same things.

That certainly is an excuse as it has data on it which affects everybody on this world. Anyway, Europe found other routes to gather same data so there is no problem here anymore. Hopefully you people also figure out how to get same data out. It requires some effort on your part. I'm not sure how to get it, though.

Obvioisly, if world's reserve currency suffers devaluation, there is a problem for everybody.

I must say again, that I am proud of every citizen journalist on here that exposes the truth.

That is what draws me to this site everyday, truly one of the best citizen journalist sites. Proves that the MSM is controlled.

So I just wanted to thank everyone on here that exposes the truth, you truly are patriots and I salute you.

Keep it up

-Kdial1

Venge Vatican.
Loot London.
Wank Washington.

Everyone counterfeit money and crash capitalism.
Welcome The Venus Project.
Yay!

Ok, let's think for a minute. The people who are doing this live here. Their kids go to school here. They own property here. This is their country, too. Why would they destroy their own country?

Next, deflation is the current problem. To counteract deflation, normally the Fed would raise the interest rates, artificially creating inflation. They tried that, and it didn't work. They then realized the problem: lack of sufficient money supply. With the increase in business and population, and a shortage of money, deflation was creeping in. To counteract deflation, they had to print money. You didn't think money supply was constant, did you? Do you think that we have the same number of dollars now that we had in 1910? Every once in awhile we need to print more money. It's not a crime, it's a necessity.

reply to post by 12m8keall2c


It's a play on numbers, they do this with Unemployment (U6 being real unemployment which is currently at around 17%+).

Generally speaking the numbers correlate the same patterns, though their differences as % can vary slightly depending on the volatility. If One index, say for unemployment, U3 is up, then all U indexes must be up. The index chosen as a medium of all the other indexes with out showing the extremes of the two levels (to much info and not enough), and leave it up to individuals to know the other indexes.

Tell a typical citizen there are 6 ways to determine unemployment, or other indexes to measure inflation/deflation etc and they will probably look very confused. And that, is exactly what they intended.

To me, they must be counting on something to happen.
...Because no way in hell do I think anyone rational would spend that much without thinking about the repurcussions... I think they know dam* straight what is going to happen...