What does the term Money Supply mean?

Well, if we take it to the personal level it’s all the money in your pockets, in your wallet or purse. On a national level it is the total of all the cash that is circulating around plus all bank accounts which the owner can access fairly quickly. That’s referred to as being a liquid asset as it can quickly flow (like water) into your wallet.

Add it all up and you have the national money supply which is also referred to as M1. When you add in all the money that is not so liquid, like certificates of deposit, that new larger figure is called M2.

The money supply goes up and down depending upon the federal government’s printing press which is controlled by the independent organization called the Fed or the Federal Reserve. Politicians can influence Fed policy but theoretically do not control it.

The total amount of M1 continually changes and as of February 2023 it totaled 19.34 trillion. Now that’s a big wallet.What does the term Money Supply mean?

Well, if we take it to the personal level it’s all the money in your pockets, in your wallet or purse. On a national level it is the total of all the cash that is circulating around plus all bank accounts which the owner can access fairly quickly. That’s referred to as being a liquid asset as it can quickly flow (like water) into your wallet.

Add it all up and you have the national money supply which is also referred to as M1. When you add in all the money that is not so liquid, like certificates of deposit, that new larger figure is called M2.

The money supply goes up and down depending upon the federal government’s printing press which is controlled by the independent organization called the Fed or the Federal Reserve. Politicians can influence Fed policy but theoretically do not control it.

The total amount of M1 continually changes and as of February 2023 it totaled 19.34 trillion. Now that’s a big wallet.

Sources:
Ivestopedia.com
FederalReserve.gov
khanacademy.org 

(Corrections and suggestions are welcomed.)