More gloom for abelard on U.S. M3 growth and its sister: hyperinflation

This time from one of my favourite commentators:
<http://prudentinvestor.blogspot.com/2006/01/us-m3-growth-exploding-in-line-with.html>

[And who says the US doesn't just print dollars to pay for oil?]

"US M3 Growth Exploding In Line With Oil Prices"

US money supply M3 - the figure the Fed will stop publishing by the
end of March in order to save 0.00000699% of its annual net income
- shows an alarming trend. In line with rising crude oil prices and
exploding public debt M3 grows faster and faster.

GRAPH: http://static.flickr.com/41/87245018_fe441259d0.jpg
M3 weekly changes in billions of dollars in the period from July 4,
2005 to January 2, 2006. Data: St. Louis Fed.

While M3 grew 8.37% over the last 12 months, the speed of the
Federal Reserve's money printing press gained speed in line with
rising crude oil prices.

In the last 6 months the annualized growth rate of M3 crossed
into the two-digit area, coming in at 10.09%.

Over the last 3 months, when oil prices retreated for a few weeks
below the $60 mark, M3 grew at an annualized rate of 9.38%.
But now don your hardhat before you read on: In the last month
M3 growth exploded to an annualized rate of 17.19%!

Being educated in the old European monetarist school that the rate of
M3 growth minus GDP growth results in the true inflation rate I will
buy more gold on the next dip after the yellow metal rose to another
25-year high last Friday, with the February future closing at $557.90.

Gold marched on further in early European trading, the spot price
advanced another $1.30 to currently $557.40. There is a very high
correlation between the gold price and future inflation expectations.
Inflation rates normally follow the development of the gold price with
a time lag of 14 months.

Also take note that the strong M3 growth coincides with the strong
rise in energy prices. Is it too far-fetched to conclude that the oil
price does not really matter to the USA because it is just a matter
of printing/electronically creating more greenbacks in order to pay
the bills?

Remember that the end of M3 publication coincides with the opening
of the Iranian Oil Bourse which will boot up its computers in April.
For much more information on M3 and the Iranian Oil Bourse browse
the archives of this blog a nd the earlier posts of this month where
all the links are provided.

I finish this post with the reminder that no nation in history has
ever managed to print its way out of its debt problems.

....over the weekend I read somewhere that every try to replace gold
with some fiat money that can be created at will has always ended in
hyper inflation, strengthening the people's craving for the precious
metal ever more.

--
"It [Blair's government] has exploited the mood of insecurity
to push through a law protecting itself from public protest."
How freedom of speech is being curtailed in Britain under Blair:
http://www.timesonline.co.uk/article/0,,2092-1937539,00.html
.

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