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Federal Reserve Drops M3 Reports

I first heard about the Federal Reserve's decision to stop reporting the M3 money supply after the press release came out in mid November. As this news was ignored by the media, I had to do some serious digging to understand the ramifications. Even a few self-proclaimed experts couldn't tell me what it meant.

Now Jeff Vail comes along and, as always, distills a complex subject into an easy-to-understand explanation:

And, of course, the timing of the discontinuation of M3 data just happens to coincide with the opening of Iran's euro-denominated oil bourse. Funny how that hasn't exactly been reported at all by ABC, CBS, NBC, CNN, Fox or the other "Main Stream Media" sources.

The result of this is that countries will no longer need to use the US Dollar as their reserve currency. As reserve currency levels drop, the fundamental impact will be a drop in demand for the US dollar. This will result in a decrease in the value of the dollar, but much more importantly it will mean that there is also a decrease in people wanting to purchase US government debt--the debt that we use to carry huge and consistent budget deficits. Of course, it will still be possible to get other nations to purchase our debt instruments and finance our deficit, but the market will shift the price equilibrium for this debt upward--that is, the interest rate that we are paying on the national debt will increase significantly.

Suddenly the mysterious Fed is much less mysterious: the M3 statistic that they will stop reporting this Spring is exactly the one that would be used to identify just such a shift in the use of the US Dollar as a reserve currency. Was that the motivation for the Fed's move? It's the only one that I am aware of, but it's no more than conjecture.

Just how fast and how strong this shift from the petrodollar to the petroeuro will snowball is difficult to predict. There are plenty of people who think that it will be alternatively minor, catastrophic, or lead to the US nuking Iran in a few months. My goal here (for once) isn't to speculate, but just to shed some light on this murky topic.

So what do we make of this news? Well, in most cases, eople only try to hide bad news not the good news. Most likely the Fed sees some serious problems ahead for us as the result of Iran's new oil trading bourse.

Read Jeff's entire post on the Fed's decision to drop the reporting of M3 here.

Social entrepreneurs: Know what drives you

Are you thinking about going into business for yourself? If you are then it's critical that you understand your motivations.

We all have different needs which fuel our desires to be entrepreneurs. However, if you match the wrong type of business with your particular need/driver combination you will most likely be miserable.

Kaleil Isaza Tuzman, who first gained notariety in the documentary "Startup.com", recently came out with a new product called The Entrepreneur's Success Kit.  The kit comes in a box containing a small book, workbook, a hundred or so laminated advice cards, and two CDs.

The first half of the course alone is worth the price of admission as it explains the six basic drivers or motivations that fuel us into entrepreneurship and through life. These are the drivers in no particular order:

1. Money (i.e., dollars are the sole measure of success for people with this driver)

2. Recognition (aka, Fame)

3. Courage (i.e., the need to feel that one is being courageous by tackling significant challenges)

4. Victory (i.e., the need to win and finish first in everything)

5. Acceptance (i.e., the need to belong to something and feel accepted by others)

6. Health (Personally, I would have called this one "Balance" as it's a need for balance in life amongst competing priorities such as business, family, friends, and general health & fitness, etc.)

If you select the wrong business for your driver your entrepreneurial foray will result in failure and frustration. For example, a Money entrepreneur will not be happy unless he is involved in a venture which holds the promise of great riches being made. Venture capitalists love these types. Conversely, a Health or Acceptance entrepreneur should avoid venture capital investors as they do not want founders with any needs other than money and victory.

You'll have to buy the Kit to find out which type you are.  It includes a self-assessment test and advice on how to select the right type of business based on your primary and secondary drivers.

Don't take it for granted that you already know your primary and secondary drivers. I was quite surprised by my results.

Well done, Kaleil.