The Money Supply

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the money supply tells us how much physical currency as well as assets so liquid that they're pretty close to acting as physical currency exists in the economy of a country at a certain point in time this data is usually reported by the country's central bank and the way it's measured can differ from country to country in the US for example the most popular data points are a the monetary base which tells us how much actual currency there is in circulation plus how much banks and other depository institutions keep as reserve balances in their accounts at the Federal Reserve bm1 tells us how much currency is held by the public as well as how many transaction deposits exist in other words accounts and deposits that can be used for transactions immediately cm2 is basically m1 plus savings deposits time deposits under $100,000 and retail money market fund shares each tells us something different so let's assume you're wondering why prices haven't gone up a ton despite the Federal Reserve pumping money into the system through quantitative easing well money supply data can help us you see there were roughly eight hundred and fifty billion dollars in the monetary base in August of 2008 so before quantitative easing started at the moment of writing after multiple rounds of QE that figure went up to approximately 3.8 trillion so about 4.5 times more down a bit from its peak of close to four point one trillion in August of 2014 by comparison the m1 money stock quote-unquote only went up roughly two point six times from approximately 1.4 trillion in August of 2008 the 3.7 trillion today and in August 2014 when the monetary base peaked it was barely at 2.8 trillion the m2 my stock went up only one point eight times from seven point eight trillion in August of 2008 to 14 trillion today and in August of 2014 it was at just 11 point five trillion as can be seen the central bank can indeed increase the monetary base at will but in our case it did not control what happened next if it prints even a hundred trillion but that money just stays Parkwood them rather than find its way into the real economy prices obviously won't go up if however it would give each US citizen an equal share of that 100 trillion amount well and good luck with that