Friday, December 29, 2006

M-3 cover-up completely restored

M3 is back

We did some sleuthing and data extraction and put M3 back together from various weekly Federal Reserve reports that are still available.
  1. The formula we're using has five 9s correlation to the original data back to 1980.
  2. There is only one missing element that is apparently no longer available (Eurodollars) and an adjustment has been applied to generate it. Its only about 3% of total M3 so should not have a material effect on the total.
Here is our article on M3b, which details our work and notes the sources for the data. Note that as of Nov. 10, 2006 the Eurodollar estimation formula has changed - see the article for details.
John Williams reconstruction of M3 is here.

The full report.