Tag: Supply

The Money Supply – FEDERAL RESERVE BANK of NEW YORK

  • For decades, the Federal Reserve has published data on the money supply, and for many years the Fed set targets for money supply growth.
  • In the past two decades, a number of developments have broken down the relationship between money supply growth and the performance of the U.S. economy.
  • In July 2000, the Federal Reserve announced that it was no longer setting target ranges for money supply growth.
  • In March 2006, the Board of Governors ceased publishing the M3 monetary aggregate.

The Federal Reserve System and public- and private-sector analysts have long monitored the growth of the money supply because of the effects that money supply growth is believed to have on real economic activity and on the price level. Over time, the Fed has tried to achieve its macroeconomic goals of price stability, sustainable economic growth, and high employment in part by influencing the size of the money supply.

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Money Supply Definition

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Money Supply – Econlib

What Is the Money Supply?

The U.S. money supply comprises currency—dollar bills and coins issued by the Federal Reserve System and the U.S. Treasury—and various kinds of deposits held by the public at commercial banks and other depository institutions such as thrifts and credit unions. On June 30, 2004, the money supply, measured as the sum of currency and checking account deposits, totaled $1,333 billion. Including some types of savings deposits, the money supply totaled $6,275 billion. An even broader measure totaled $9,275 billion.

These measures correspond to three definitions of money that the Federal Reserve uses: M1, a narrow measure of money’s function as a medium of exchange; M2, a broader measure that also reflects money’s function as a store of value; and M3, a still broader measure that covers items that many regard as close substitutes for money.

The definition of money has varied. For centuries, physical commodities,

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Money Supply Charts

The Fed ceased publishing M-3, its broadest money supply measure, in March 2006. The SGS M-3 Continuation estimates current M-3 based on ongoing Fed reporting of M-3’s largest components (M-2, institutional money funds and partial large time deposits) and proprietary modeling of the balance. See the Money Supply Special Report for full definitions.

M3 Data Series   subcription required(Subscription required.)  View  Download Excel CSV File    Last Updated:  March 14th, 2020

Year to Year Change

Changes in money supply have implications both for domestic economic activity and inflation, as discussed in the previously mentioned Money Supply Special Report.

Here we show year-to-year growth as a measure of the changing money supply.

NoteA downward slope in this growth curve does not necessarily mean that the money supply is dropping.  Only if the curve goes below zero does that show money supply having contracted over a full twelve months.

Also, for

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The Fed – What is the money supply? Is it important?

What is the money supply? Is it important?

The money supply is the total amount of money—cash, coins, and balances in bank accounts—in circulation.

The money supply is commonly defined to be a group of safe assets that households and businesses can use to make payments or to hold as short-term investments. For example, U.S. currency and balances held in checking accounts and savings accounts are included in many measures of the money supply.

There are several standard measures of the money supply, including the monetary base, M1, and M2.

  • The monetary base: the sum of currency in circulation and reserve balances (deposits held by banks and other depository institutions in their accounts at the Federal Reserve).
  • M1: the sum of currency held by the public and transaction deposits at depository institutions (which are financial institutions that obtain their funds mainly through deposits from the public, such as commercial banks,
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Money Supply: Definition, Quantity, and Impact

The U.S. money supply is all the physical cash in circulation throughout the nation, as well as the money held in checking accounts and savings accounts. It does not include other forms of wealth, such as long-term investments, home equity, or physical assets that must be sold to convert to cash. It also does not include various forms of credit, such as loans, mortgages, and credit cards.

Measurement of the Money Supply

The Federal Reserve measures the U.S. money supply in three different ways: monetary base, M1, and M2.

  • Monetary base is the sum of currency in circulation and reserve balances (i.e., deposits held by banks and other depository institutions in their accounts at the Federal Reserve).
  • M1 is the sum of currency held by the public (i.e., currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions); traveler’s checks
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