3 ms·

I think the fed's own graph is the picture worth a thousand words. Don't forget that this is the M1 money supply, which will be expanded by about 8.5x by fracti

I think the fed's own graph is the picture worth a thousand words. Don't forget that this is the M1 money supply, which will be expanded by about 8.5x by fractional reserve banking. https://fred.stlouisfed.org/series/M1REAL https://fred.stlouisfed.org/series/M1REAL

Brett_S 6y ago
I understand M1 includes the most liquid portions of the money supply in circulation. When the Fed "prints" money I don't think they are talking about physical money. Can someone explain what this graph tells us?
- aniro 6y ago
  "The money supply measures reflect the different degrees of liquidity—or spendability—that different types of money have. The narrowest measure, M1, is restricted to the most liquid forms of money; it consists of currency in the hands of the public; travelers checks; demand deposits, and other deposits against which checks can be written. M2 includes M1, plus savings accounts, time deposits of under $100,000, and balances in retail money market mutual funds." From the Fed itself: https://www.newyorkfed.org/aboutthefed/fedpoint/fed49.html https://www.newyorkfed.org/aboutthefed/fedpoint/fed49.html
- R0b0t1 6y ago
  The money is physical in the sense that people are able to extract value from it. It is given to a bank to loan out, essentially for free, and they are able to keep the interest. So if you're a bank you basically are given free money by the government.
cma 6y ago
> which will be expanded by about 8.5x by fractional reserve banking. Didn't they remove all reserve requirements back on March 15? I thought a 0 requirement would cause a bigger than 8.5X multiple with enough time (all else equal).
- aniro 6y ago
  They did exactly that.