M3 is back

When the Federal Reserve stopped reporting the M3 money supply growth figures, a number of contrarian writers cried foul. The community considers the M3 growth rate as the true rate of inflation, as opposed to the more commonly reported CPI figures, which usually run at 2-3%.

Apparently, some enterprising folks have been able to re-construct M3 using various pieces of publicly available figures that are still available, and they call their figure M3b. They have back-tested their calculations, and the figures seemed to correlate quite well.

The big news is that the M3 growth rate has now gone over 12%. The last time I checked, it was at 10%, and I was telling people that your investment portfolio had to beat 10% in order to beat the true inflation rate. Well. That was then. From now on you have to beat 12%. Per year. Every year. And every time the M3 rate goes up, the goal posts are moved as well.

And with this, given the 10.01% annualized gain last reported, my portfolio is now falling behind M3. Have to try harder next round.

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