Monday 824

 

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 10 Money and Prices in the Long Run

Chapter 29 of 36 The Monetary System

Section 6 of 22

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Figure 1 – Two measures of the money stock for the U.S. economy

The two most widely followed measures of the money stock are M1 and M2.

Data for year 2007.

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How do we measure the amount of money, the money stock, in the U.S. economy?

The most obvious money is currency, the paper bills and coins circulated by the public.

Currency is not the only asset you can use to buy goods and services.

Stores commonly also accept personal checks.

So, to measure the money stock you would include checking accounts.

After including checking accounts as part of the money stock we are led to consider the large variety of other accounts people hold at banks and other financial institutions.

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Bank depositors usually cannot write checks on their savings account balances.

But they can easily transfer funds from savings to checking accounts.

Depositors in money market mutual funds can often write checks on their balances.

So, savings accounts and money market funds can be considered part of the U.S. money stock.

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We can see it is not easy to draw a line between assets that can and cannot be called "money."

Coins and dollar bills obviously are part of the money stock, the Empire State Building clearly is not.

But there are many assets between these extremes where the choice is not clear.

Because analysts can reasonably disagree about where to draw the line between monetary and nonmonetary assets there are various measures of the money stock.

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Figure 1 shows the two most common measures of the money stock, M1 and M2.

M1 contains the most liquid, easiest to use as money, assets including currency and checking accounts.

M2 adds to M1 less liquid assets including savings accounts.

For our purposes here we will not dwell on the differences between the various measures of money.

None of our discussions will hinge on the difference between M1 and M2.

The important point is the money stock of the U.S. economy includes not just currency but also includes deposits in banks and other financial institutions that can be readily accessed and used to buy goods and services.

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the important point

jūyōna pointo

重要なポイント

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What are the current U.S. M1 and M2 money amounts? ChatGPT:

(confirmed amounts with Gemini)

August 12, 2026:

M1 $19.8 trillion

M2 $23.2 trillion

These figures come from the official Federal Reserve H.6 release and are confirmed across FRED (St. Louis Fed), Trading Economics, and other aggregators. M1 rose modestly from $19,751.0 billion in May 2026; M2 rose from $23,055.6 billion. Year-over-year, M1 was up about 5.8% from June 2025 and M2 about 5.5%.