Lots of sensible comments here, time for me to drag this diary down the rabbit hole into Metatone's Paranoid World (TM).

What I see is that as a technical measure, M3, is as the Fed suggests, no more indicative than M2.

However, the changes in M3 indicate something and I think it was ChrisCook that drew my attention to it.

Money supply has been increased, but not so much through the old way, which was central bank action, rather by financial deregulation (as TGeraghty also notes.)

The key issue here is that if you sit down with:

a) M1 and M2
b) Interest rate decisions

you will happily conclude that inflation has been low because inflationary pressures are low. This allows you to ignore the "asset bubble." Incidentally, this kind of round robin of measurements probably plays into the "core inflation" debate too.

It's only when you look at M3 that you get an explanation for the "asset bubble."

Do I think the Fed did it on purpose?

No, I don't think that these figures are politically important enough to bother with in that way.

Do I think the result of de-emphasising the M3 number is to help people pretend to themselves and others that "there is no asset bubble and no inflationary consequences thereof."
Almost certainly...