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Gold/Mining/Energy : GOLD-XAU
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To: IngotWeTrust who wrote (668)12/16/1997 6:42:00 PM
From: PaulM  Read Replies (1) of 1756
 
Hello O'49er. It's my understanding an increase in the "monetary base" (M-3) does not necessarily work its way through the system to become M-1 or M-2, and therefore doesn't necessarily result in what most would think of as "inflation." The market, not the FED, will determine M-1 and M-2.

For a while now, we've had M-3 moving along at a nice clip, but M-1 actually decreasing. Some argue that's a classic sign of deflation (even depression). The FED is getting less bang for its inflationary buck.

At the same time, M-2 does suggest there should be more inflation than official govt stats currently suggest.

The 11% increase in M-3 is clearly out of the ordinary however and must somehow be related to Asia. Expect to see much, much more of the same.
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