US Money Supply: More Lies from On High


by Egon Von Greyerz, Gold Switzerland:

Upton Sinclair famously observed that, “it is difficult to get a man to understand something, when his salary depends on his not understanding it.”

After decades navigating among Wall Street sell-siders or reading the pablum that passes for financial journalism in the retail space, I discovered it was always an open secret in the big banks that if you wanted to move up the ladder, don’t rock the boat.

In short: Keep the message bullish, as bears get fired and bulls stay hired.

Such Realpolitik is nothing new; employees, be they working for the New York Times, the Federal Reserve or Goldman Sachs, have a vested interest in staying employed.


This by no means makes self-preserving realists cowards, but it certainly doesn’t make such professionals helpful fiduciaries to those trying to make sense of that oh-so elusive chimera otherwise known as blunt facts and hard truths.

In the halls of financial power, and by extension financial messaging, such self-preservation often entails a bit of open dishonesty, which frequently takes the form of concealing rather than just misreporting the facts.

As the expressions goes: “A man does not sin by commission only, but often by omission.”

The U.S. Fed, like the vast majority of central bankers, has a long history of messaging fantasy over reality in the name of self-preservation and/or maintaining “market order.”

Their most effective lies are typically characterized not just by what they say overtly, but in what they conceal covertly.

Lies of Distortion

The open Charade, for example, of low inflation fictionally published under the U.S. CPI scale is a classic example of omitting certain facts in order to derive at a comforting fiction. We’ve written at length on this topic dishonest inflation reporting.

Such clever distortions of reality are not mere exceptions to Fed reporting and/or Fed speak, but a way of life for policy makers with an Orwellian capacity to be “ministers of truth” despite hiding it from the masses on a daily basis.

Lies of Omission

As for hiding facts, perhaps you’ve noticed something which the main stream media has largely overlooked, namely that the Fed recently decided to suspend the weekly reporting of the M1 and M2 data which typically came out every Thursday at 4:30 PM.

And if you want to know why, the answer is as simple as it is predictable: When policy makers don’t like the facts, they just burry them.

Like a child seeking to hide a bad report card from his parents, the Fed likes to hide bad news from the masses.

Take, for example, the following graph of the rise in the M1 supply, which tracks the level of current hard cash notes, coins, paper money and checking account deposits.

As of April 2021, the M1 supply has gone from $4.5T to $18.1, a rise of 450%

Needless to say, such data represents a pretty bad report card for the Fed’s failed monetary experiment of unlimited QE.

Staggering M1 data like this has many embarrassing and undeniable implications regarding inflationary risk, currency risk, social risk and hence political risk.

The Fed’s solution to the problem? Hide it.

We see the same suspension of weekly M2 data, which comprises the M1 money supply plus the amount of dollars in saving accounts, mutual funds and money market securities. As the graph below confirms, the M2 levels have recently surged by 30% from $15T to just under $20T:

Given that such a dramatic money supply rise points directly to the consequences of extreme money creation which leads to extreme inflation (which, after all, is defined by money supply) and hence extreme currency debasement, the Fed naturally chose to discontinue such weekly reporting of the same.

A Foundation of Lies

Again, such lies of omission are nothing new for a private bank whose very name “Federal Reserve” is itself an open lie, as is the irony of it being headquartered on Constitutional Ave., despite our founding father’s clear and Jeffersonian intent to never allow such a bank within our Constitution…

The Same Ol’ Same Ol’

Be reminded, for example, that as the U.S. was marching straight into the Great Financial Crisis of 2008, (unleashed by Fed Chairman Alan Greenspan’s pre-08 rate cuts), an embarrassed yet truth-challenged Fed decided to fully discontinue M3 reporting in 2006.

In short, we see a familiar pattern: When the data is bad, hide it.

M3 money supply was the measure of M2 money supply plus institutional money market funds, larger deposits and larger liquid assets.

It too was a screaming indicator of trouble ahead, and thus the Fed simply chose to cancel the truth; M3 reporting by the Fed vanished and has never come back.

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