⧉ . ᴘʀɪᴄᴇᴀɢᴇs ᴍᴀɢᴀᴢɪɴᴇ - PyndanEX™

NEXT | Allocated Industries 🏄 What's your Mission? PyndanEX™ 🔎 Discover The Possibilities We're Spreading Results! powered by Surfing Waves ᴛʀᴀᴅɪɴɢᴠɪᴇᴡ Advanced Medical Equipment & Technology Advertising & Marketing Aerospace & Defense Agricultural Chemicals Basic Materials Air Freight & Courier Services Airlines Airport Services Aluminum Apparel & Accessories Apparel & Accessories Retailers Appliances, Tools & Housewares Auto & Truck Manufacturers Auto Vehicles, Parts & Service Retailers Auto, Truck & Motorcycle Parts Banks Biotechnology & Medical Research Brewers Broadcasting Business Support Services Business Support Supplies Casinos & Gaming Closed End Funds Coal Commercial Printing Services

Money Supply: What is M0, M1, M2 and M3?

Project VERT


Pyndan & Company Enterprise
Welcome to Our Community, We're Building More

M0 is material currency (cash itself); all notes, coins, specie and bearer certificates convertible on demand (which includes, by definition, depositor reserves of banks which must be kept in physical cash).

M1 includes M0 plus the balance of all deposit accounts which can be instantly converted into cash of equal value (known as "cash equivalent"). This is more than M0 (up to 10 times M0 in fact) because a fundamental principle of economics is that there doesn't have to be enough paper money in existence to cover everyone's bank deposits, because the entire economy won't want their accounts cashed and closed at the same time. So, M1 includes some "fake money", but in the working economy it changes hands as if it were physical cash.

M2 is M1 plus all other depositor accounts that can be readily (within 30 days) converted to physical cash of equal value (known as "near-cash"). This includes all savings, money market etc. accounts, and also certain short-term investments. So, this is wealth that may not be instantly convertible, but can be guaranteed to retain its worth during a conversion happening very soon. This measure of money is not commonly referenced anymore because the 30-day period is seen as arbitrary; if there's any restriction on conversion to cash, it's not guaranteed to be "instantly available" and so not cash equivalent; any subdivision beyond that is just a function of time.

M3 is M2 plus all other investment instruments that can be converted into cash, but which may have significant restrictions on a timely conversion and/or a lack of guarantee that the investment's stated worth will be retained in the conversion to cash. So, M3 also includes the worth of the equity and bonds markets denominated in a particular currency, as well as the value of some types of futures contracts and options and virtually all "institutional" investments (as regulations often prohibit the "dumping" of such large holdings onto the market in one transaction, and even if allowed would likely not result in an equitable conversion to cash). It's the widest classification of "money" typically used, as beyond this point it becomes hard to tell the real difference, in a worth and convertability perspective, between stores of value and fixed assets.


Learn More!
Project - KIT on PyndanEX™
Business Intelligence That Matters

 🇺🇸 Envision The World, Coordinate Your Future

Popular posts from this blog