Tuesday, November 22, 2005

one way to get rid of inflation

in an effort to downplay the notion of inflation, the government will stop publishing M3, the broadest measure of money supply.
[S]keptics note that M3 - which includes the very biggest deposits not contained in M2 - is rising about 7.5 percent right now, compared with just 5.6 percent growth at the end of 2004.
M2, on the other hand, has a more modest 4 percent growth, which is down from 5.6 percent last year.
over the last several years, money supply has increased at an (un)healthy clip. since increase in money supply is the underlying cause in price inflation, getting rid of M3 allows for further massaging of CPI and various other measures the government uses. (although i prefer real world measures like the 12 days of christmas index)

it's in the government's interests to work the numbers since benefits and salaries often have cost of living adjustments tied to CPI.

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