Here痴 a question from Brad on my comments concerning our currency:

You are correct with your comment about our currency having no intrinsic value. The penny has hardly any copper content in it today because the $ has been devalued so much that if the 1 cent coin were actually made of copper it would be worth close to twice its face value in terms of recent spot prices for copper. I have followed your web site for over a year now and find your postings very informative. I would like to know what your opinion is on the Feds recent decision to stop reporting on M3. Personally, I believe it is an indicator the Fed is about to flood the system with dollars. Your comments would be appreciated. � Brad

The removal of reporting M3 is yet another step of keeping investors in the dark when it comes to financial reporting. If you have been following my blog, I have questioned the reliability of the inflation data released by the government.

The CPI for example does not include the cost of energy. It is suppose to reflect the prices of a fixed basket of goods bought by the typical consumer for items like food, transportation, shelter, utilities, clothing, medical care, entertainment, and various other items.

The sub-section they like to use when focusing on the inflation data is the 田ore� number. The core is simply not a reliable measure of inflation. To get the true picture of any statistic, I致e always been taught to look at the 杜ean� of any statistic.

As far as the discontinuation of the M3 data is concerned, I don稚 know how the Fed can discontinue its use. M3 is the broadest measure of the money supply since it includes all of M1 and M2 plus�(And this may be the answer) the financial instruments of large institutions.

So what are some financial instruments of financial institutions? How about derivatives? Derivatives are financial instruments which are not easily converted into spendable forms of cash. They also reap havoc on a company痴 balance sheet.

Recently, Fannie Mae (FNM) has used improper accounting methods to smooth out gyrations in its earnings due to derivatives, which the company uses to hedge against movements in interest rates. Freddie Mac (FRE) is also being looked at. The question being raised by Warren Buffett and others is how many other financial institutions are there using the same methods to smooth out their earnings as well.

I may be wrong, but I think the removal of M3 may be one way of hiding many of these problems.