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Just because M2 and M3 are growing at the same rate doesn't make them the same thing. What I'm suggesting is that the increase in absolute terms of M3 has a significance in understanding asset inflation.

Bruce McF suggests that M3 is the product of the asset bubble, which is fair enough. My point is that the value of taking M3 out of the public eye is that it removes this thing that is potentially an indicator of the asset bubble from the public vision.

M2 is also growing, but the mechanism for that is more easily explained in ways related to other fundamentals and as such doesn't act as a signifier of an asset bubble the way M3 might.

Maybe I'm not making any sense, I'm too tired to clarify this now, I'll try to remember tomorrow.

by Metatone (metatone [a|t] gmail (dot) com) on Sun Oct 7th, 2007 at 06:47:18 PM EST
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