Printing Dollars, Deleveraging. M3, and inflation

[Galt]

I have been trying to get my brain around this one issue for a while, and I admit I never learned enough in economics class to really have a grasp of it. Please correct any flawed thinking.

I understand that the Fed and USA are creating Dollars at a furious rate. Normally this would be highly inflationary, and I have been structuring my investments accordingly. But I am starting to think that maybe this inflation is already in the system. If there is a specific amount of money in the system, and banks are leveraged 30 to 1, that has a specific impact on the total money float out there. Now if banks cut their leverage in half (to 15/1) it seems to me that the Fed could double the amount of money in circulation and have ZERO impact on monetary inflation, since the total float would be the same.

This started a few years back when the Fed stopped providing M3 money supply figures. That was the real important number, the one that would have shown what they have been doing for the last few years in terms of inflation-creating monetray policies. M3 has just been exploding since then, and is starting to look sort of parabolic. The only reference (unofficial) I can find is:

http://www.nowandfutures.com/key_stats.html

Yet the last year is showing that growth in M3 is moderating. It is making me wonder if my gold position was a bit premature.

Am I right in thinking that M3 is the key to what will happen next? Does the Fed watch this number even though they no longer provide it to the public?

[zyzzyva57]

I suspect to play gold will require you to be nimble in that you see pouring money into our economy has stopped serving the purpose, i.e., the Law of Diminishing Returns has set in

The FED to pick up on this will mean it will have to be nimble, which I simply think is impossible for a federal agency

Common Sense is not common...