mlsoft, re m3: this is quoted elsewhere from bob carver:
"Several have emailed that the Fed is preparing for some kind of financial meltdown by pumping up the M3 money supply. First of all, the Fed may control short term measures of money, but has little control of M3. Secondly, the M3 rate of growth is simply regressing to the mean — returning to the growth trend it was on before the 2003 period of sideways-to-down movement that raised deflationary fears last year. Clearly, the long term chart of M3 from the FRED II site doesn't suggest anything out of the ordinary:
(solarbear note: Chart shows steady up since 2000 nothing parabolic)
The growth in M3 may simply represent a reliquification of the system as hedgers cash in their chips due to rising interest rates. As you can see from the bond chart, there has been a great deal of selling pressure in that market:
That "carry trade" allowed borrowing at rock-bottom rates to finance buying of longer term (and higher yielding) securities, thus locking in a profit due to the difference in rates — as long as rates were heading lower, that is. With rates moving rapidly higher, those carry trades are losing money and thus have generated almost panic selling in the bond market over the past few weeks. This unwinding could have even been the fundamental reason why gold and gold stocks have been tumbling in the face of rising commodity prices, including oil. If that is the case, we should have an absolutely fabulous buying opportunity coming up soon in the gold stocks."
