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Latest revision as of 19:56, 9 November 2022

Money supply, "monetary aggregates" or "money stock" is a macroeconomic concept defining the quantity of money available within a nation’s economy which can be used to purchase goods, services, or financial securities. A nation’s money supply is comprised of all currency including bills, coins, and deposits issued by the nation’s central bank. Reserves mark the sum of all bank vault values and all reserve deposits held by the central bank. Combined, a nation’s currency and the level of bank reserves comprise the total money supply, or monetary base. Total money supplies are generally measured by the sum of currency in circulation, checking deposits, and saving deposits. The U.S. Federal Reserve uses three definitions of money to measure its money supply; M1 which measures money in exchange, M2 which measures money in storage, and M3 which measures objects that can act as money substitutes. Generally, central banks regulate the money supply through the operation of various monetary policies, in efforts to stabilize their economy. While it is agreed that the money supply of a country is a significant factor, understanding how to best regulate it in order to promote a healthy economy is less clear. As humankind develops greater maturity, learning to live harmoniously for the sake of others, our understanding of how to regulate the money supply will also develop and be able to be implemented successfully, supporting the maintenance of a peaceful world of harmony and co-prosperity.

Monetary Aggregates

Different measures of a nation's money supply reflect various degrees of asset liquidity, which marks the ease at which a monetary asset can be turned into cash. Liquid assets include coins, paper currency, checkable-type deposits, and traveler’s checks. Less liquid assets include money market deposits and saving account deposits. Measure MI, the most narrow of measures, includes only the most liquid forms of monetary assets&dmash;all currency and bank deposits held by a nation’s public. M2, a slightly broader measure includes all values incorporated under MI, in addition to assets held in savings accounts, certain time deposits and mutual fund balances.

The United States

U.S. Money Supply from 1959-2006

Under the U.S. Federal Reserve, the most common measures of money supply are termed M0, M1, M2, and M3. The Federal Reserve defines such measures as follows:

M0: The total of all physical currency, plus accounts at the central bank which can be exchanged for physical currency.
M1: Measure M0 plus the amount in demand accounts, including "checking" or "current" accounts.
M2: Measure M1 plus most savings accounts, money market accounts, and certificate of deposit (CD) accounts of under $100,000.
M3: Measure M2 plus all other CDs, deposits of eurodollars and repurchase agreements.

The United Kingdom

Within the United Kingdom, there are just two official money supply measures. M0, which is referred to as the "wide monetary base" or "narrow money," and M4, which is referred to as "broad money" or simply "the money supply." These measures are defined as such:

M0: All cash outside the Bank of England plus private banks' operational deposits with the Bank of England.
M4: All cash outside banking institutes, either in circulation with the public and non-bank firms, plus private-sector retail bank and building society deposits plus private-sector wholesale bank and building society deposits and certificates of deposits.

Determination

A nation’s money supply is determined by the monetary policy actions of its central bank. Commercial banks, as required by the central bank, must keep a fraction of all accepted deposits on reserve either in bank vaults or in central bank deposits. Accordingly, a nation’s central bank can maintain control of such reserves by lending to commercial banks and altering the rate of interest to be charged on such loans. These actions are known as open market operations and allow central banks to achieve a desired level of reserves.

In determining a nation’s money supply, its central bank first sets the supply of the monetary base and upholds certain restrictions on the value of assets and liabilities held by smaller commercial banks. Though the consumer demand for liquidity is dictated by the public, small commercial banks are required to meet consumer demand and do so by identifying certain conditions including a set interest rate which apply to the loaning of bank liabilities. Commercial bank behavior, ultimately regulated by the nation’s central banking institution, and conjunction with consumer demand define the total stock of money, bank credit, and rates of interest which shape national economic conditions.

The value of the money supply is determined by the money multiplier and the monetary base. The monetary base consists of the total quantity of government-produced money and includes all currency held by the public and reserves held by commercial banks. The central bank retains tight control over its nation’s money supply through the use of open market operations, the discount rate, and reserve requirements.

Money Multiplier

The money multiplier is jointly determined by the economic behavior of consumers, commercial banks, and the central bank. Factors which limit the money multiplier include consumer expectations and their decisions to hold money, and the liquidity preferences of commercial banks to hold excess reserves. In short, the money multiplier must account for various levels of consumer demand, private bank demands, and any resulting market conditions.

The value of the money multiplier is directly related to consumer behavior in that an increase in the demand for money will subsequently decrease the size of the money multiplier. An increase in the demand for excess reserves by private banks will also diminish the money multiplier, decreasing with it the value of the money supply, the amount of bank loans, and deposits. Changes in the money multiplier represent short-run fluctuations and often denote temporary changes to the total money supply.

Monetary Base

A nation’s monetary base constitutes its total money supply. It defines the volume of money within the economy and is comprised of currency, banknotes, coins, and commercial bank reserves held by the central bank. A narrow definition of the money supply, the monetary base consists of only the most liquid forms of money and can be controlled by a nation’s central bank through its use of monetary policy in particular the employment of open market operations.

Central Bank Policies

A nation’s money supply is closely tied to all levels of its economic activity. Short-run changes in a nation’s money supply may prove to have immediate economic effects on employment levels, output levels, and real income levels, while the long-run behavior of a nation’s money supply often determines levels of price inflation. Increases in a nation’s money supply have been shown to increase levels of aggregate demand, raising with it spending levels, production, the demand for labor and for capital goods. A decrease in a nation’s money supply has been shown to reverse such effects—consumer demand falls, spending levels tighten and the level of economic activity declines. A nation’s central bank can alter is total money supply by employing open market operations, changes in the discount rate, or alterations to reserve requirements.

Open Market Operations

Open market operations, the most dominant instrument of monetary policy, is the behavior of a nation’s central bank to trade or purchase government securities for cash in attempts to expand or contract the total money supply. While purchases of government securities prove to expand the total monetary base, the selling of government securities will ultimately contract a nation’s monetary base.

Reserve Requirements

Under fractional reserve banking, a nation’s central bank is responsible for holding a certain fraction of all deposits as cash or on account with the central bank. Central banks may alter the total money supply by changing the required percentage of total deposits to be held by commercial banks. An increase in reserve requirements would decrease the monetary base; a decrease in the requirements would increase the monetary base.

Discount Rate

A nation’s central bank is also responsible for supplying commercial banks with enough currency to meet consumer demand. By controlling the national interest rate, a central bank can adequately meet and further dictate the consumer demand for money. A decrease in the interest rate will spark an increase in the consumer demand for money; an increase in the rate of interest will lessen its demand. Changes in the interest rate also play a role in the setting of price levels. Any increase in the demand for money will increase spending levels and cause prices to rise. A decrease in the demand for money will slow spending levels and produce a subsequent decrease in price levels. If consumers expect price levels to fall, the demand for money will increase. If consumers expect price levels to increase, the demand for money will decline.

Monetary Objectives

Though a nation’s money supply delineates the total amount of money within a national economy, nations also employ various methods or principles to measure their total money stock. Similarly, a nation’s central banking institution retains various monetary objectives to ensure national economic stability. Some objectives belonging to the Federal Reserve, the Bank of England and the European Central Bank are listed below.

The Federal Reserve

The U.S. Federal Reserve is responsible for monitoring the money supply of the United States. When aiming to expand the U.S. money supply by means of expansive monetary policy, the Federal Reserve adds more reserves to the banking system in order to allow private banks more liquidity and ensure their ability to issue loans. The Federal Reserve aims to foster economic growth within the United States by maintaining stability within the national money supply and regulating the actions of private banking institutions throughout the U.S.

The Bank of England

The Bank of England is the central banking institution of the United Kingdom, retaining control over its money supply and the determination of its interest rate. The Bank of England is responsible for controlling the U.K.’s foreign exchange rates and gold reserves and aims toward ensuring monetary and financial stability. The interest rate set by the Bank of England is set through financial market operations and dictates the rate at which the Bank of England lends credit to various financial institutions. The Bank retains a monopoly on the issuance of banknotes within the United Kingdom and, under the Bank’s Monetary Policy Committee, aims to set a general interest rate that meets an overall economic inflation target.

The European Central Bank

The European Central Bank (ECB), is responsible for controlling the money supply and setting the rate of interest, or the discount rate, for the countries that comprise the European Union. The main objective of the ECB is to ensure price stability and to limit inflationary pressures that constrain consumer purchasing power throughout the EU. In order to maintain economic health, contemporary ECB policies have targeted annual inflation rates that ensure less than two percent increases in consumer price levels. By retaining tight control of the money supply to limit inflation levels, and by further monitoring present and past price trends, the ECB aims to adequately assess the risks to price stability and attempt to assuage them.

Policy Criticism

U.S. M3 money supply as a proportion of gross domestic product.

One of the principal jobs of central banks, such as the U.S. Federal Reserve, the Bank of England and the European Central Bank, is to keep money supply growth in line with real Gross Domestic Product (GDP) growth. Central banks do this primarily by targeting some inter-bank interest rate. In the United States, this is the federal funds rate obtained through the use of open market operations.

A very common criticism of this target policy is that "real GDP growth" is, in fact, meaningless and since GDP can grow for many reasons including man-made disasters and crises, is not correlated with any known means of measurement well-being. The policy use of GDP figures is considered to be an abuse, and a common solution proposed by such critics is that a nation’s money supply should be kept in line with a more ecological, social and human mean of well-being. In theory, money supply would expand when well-being is improving and contract when well-being is decreasing. Proponents believe this policy to give all parties in the economy a direct interest in improving well-being.

This argument must be balanced against the standard view among economists: that the control of inflation is the main job of a central bank, and that any introduction of non-financial means of measuring well-being has an inevitable "domino effect" of increasing government spending and diluting capital.

Currency integration is thought by some economists, including Nobel Prize winner Robert Mundell, to alleviate this problem by ensuring that currencies become less competitive in the commodity markets, and that a wider political base be employed in the setting of currency and inflation and well-being policy. This thinking is in part the basis of the Euro currency integration within the European Union.

Some economists argue for the money supply to remain constant at all times. With growth in production, this would result in falling prices. A constant money supply would keep nominal incomes constant over time; however falling prices lead to an increase in real incomes. Due to such conflict, policy regarding a nation’s money supply remains one of the most controversial aspects of economics itself.

References
ISBN links support NWE through referral fees

Federal Reserve Bank of New York. The Money Supply. Retrieved July 20, 2007.
Hussman, John P. Breaking Monetary Policy into Pieces. Hussman Funds Weekly Market Comment. Hussman Funds Retrieved July 20, 2007.
Ingham, Geoffrey. The Nature of Money. Polity Press, 2004. ISBN 074560997X
Mzumara, Macleans. The Theory of Money and Banking in Modern Times. Tate Publishing & Enterprises, 2006. ISBN 1933290021
Schwartz, Anna J. Money in Historical Perspective. Chicago, IL: University Of Chicago Press, 1989. ISBN 0226742288
Schwartz, Anna J. Money Supply. The Concise Encyclopedia of Economics. Retrieved July 20, 2007.

External Links

All links retrieved November 9, 2022.

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 [[Category:Economics]]
-{{Contracted}}
+{{Copyedited}}{{Submitted}}{{Images OK}}{{Approved}}{{Paid}}
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+{{Public finance}}
+'''Money supply''', "monetary aggregates" or "money stock" is a [[macroeconomics|macroeconomic]] concept defining the quantity of [[money]] available within a nation’s economy which can be used to purchase [[consumer good|goods]], services, or financial [[securities]]. A nation’s money supply is comprised of all [[currency]] including bills, [[coin]]s, and deposits issued by the nation’s [[central bank]]. Reserves mark the sum of all bank vault values and all reserve deposits held by the central bank. Combined, a nation’s currency and the level of bank reserves comprise the total money supply, or monetary base. Total money supplies are generally measured by the sum of currency in circulation, checking deposits, and saving deposits. The [[United States|U.S.]] [[Federal Reserve]] uses three definitions of money to measure its money supply; M1 which measures money in exchange, M2 which measures money in storage, and M3 which measures objects that can act as money substitutes. Generally, central banks regulate the money supply through the operation of various [[monetary policy|monetary policies]], in efforts to stabilize their economy. While it is agreed that the money supply of a country is a significant factor, understanding how to best regulate it in order to promote a healthy economy is less clear. As humankind develops greater maturity, learning to live harmoniously for the sake of others, our understanding of how to regulate the money supply will also develop and be able to be implemented successfully, supporting the maintenance of a peaceful world of harmony and co-prosperity.
+{{toc}}
+==Monetary Aggregates==
+Different measures of a nation's money supply reflect various degrees of asset [[liquidity]], which marks the ease at which a monetary asset can be turned into cash. Liquid assets include [[coin]]s, paper [[currency]], checkable-type deposits, and traveler’s checks. Less liquid assets include money market deposits and saving account deposits. Measure MI, the most narrow of measures, includes only the most liquid forms of monetary assets&dmash;all currency and bank deposits held by a nation’s public. M2, a slightly broader measure includes all values incorporated under MI, in addition to assets held in savings accounts, certain time deposits and mutual fund balances.
-'''Money supply''' ("monetary aggregates", "money stock"), a [[macroeconomics|macroeconomic]] concept, is the quantity of [[money]] available within the economy to purchase [[good (economics)|good]]s, [[service]]s, and [[security (finance)|securities]].
+===The United States===
+[[Image:Money-supply.png|thumb|right|250 px|U.S. Money Supply from 1959-2006]]
-==Introduction==
+Under the U.S. [[Federal Reserve]], the most common measures of money supply are termed M0, M1, M2, and M3. The Federal Reserve defines such measures as follows:
-The monetary sector, as opposed to the [[real sector]], concerns the money ''market''. The same tools of analysis can be applied as to other markets: supply and demand result in an equilibrium price (the [[interest rate]]) and quantity (of real money balances).
-When thinking about the "supply" of money, it is natural to think of the total of [[banknote]]s and [[coin]]s in an economy. That, however, is incomplete. In the [[United States]], coins are ''minted'' by the [[United States Mint]], part of the [[United States Department of the Treasury|Department of the Treasury]], ''outside of'' the [[Federal Reserve]]. Banknotes are ''printed'' by the Bureau of Engraving & Printing ''on behalf of'' the Federal Reserve as symbolic tokens of electronic credit-based money that has already been created or more precisely, ''issued'' by [[bank|private banks]]<ref name="footnote_1">The term ''private bank'' is here used as a bank that is not government owned, not as a bank for high net worth individuals.</ref> through [[fractional reserve banking]].
-In this respect, all banknotes in existence are systematically linked to the expansion of the electronic credit-based money supply. However, coinage can be increased or decreased outside this system by Legal Mandate or Legislative Acts. However, at present the coin base is held in check and used as a complementary system rather than a competitive system with private bank issue of electronic credit-based money. The common practice is to include printed and minted money supply in the same metric '''M0'''.
-The more accurate starting point for the concept of money supply is the total of all electronic credit-based deposit balances in bank (and other financial) accounts (for more precise definitions, see below) plus all the minted coins and printed paper. The M1 money supply is M0, plus the total of (non-paper or coin) deposit balances without any withdrawal restrictions (restricted accounts that you can't write checks on are put in the next level of liquidity, M2).
-The relationship between the M0 and M1 money supplies is the '''money multiplier''' &mdash; basically, the ratio of cash and coin in people's wallets and bank vaults and ATMs to Total balances in their financial accounts. The gap and lag between the two (M0 and M1 - M0) occurs because of the system of fractional reserve banking.
-==Scope==
-Because (in principle) money is anything that can be used in settlement of a [[debt]], there are varying measures of money supply. The narrowest (i.e., most restrictive) measures count only those forms of money available for immediate transactions, while broader measures include money held as a store of value
-===United States===
-[[Image:Money-supply.png|thumb|right|U.S. Money Supply from 1959-2006]]The most common measures are named M0 (narrowest), M1, M2, and M3. In the United States they are defined by the Federal Reserve as follows:
 * '''M0''': The total of all physical [[currency]], plus accounts at the central bank which can be exchanged for physical currency.
-* '''M1''': M0 + the amount in [[demand account]]s ("checking" or "current" accounts).
+* '''M1''': Measure '''M0''' plus the amount in demand accounts, including "checking" or "current" accounts.
-* '''M2''': M1 + most [[savings account]]s, [[money market account]]s, and [[certificate of deposit]] accounts (CDs) of under $100,000.
+* '''M2''': Measure '''M1''' plus most savings accounts, money market accounts, and certificate of deposit (CD) accounts of under $100,000.
-* '''M3''': M2 + all other CDs, deposits of [[eurodollars]] and [[repurchase agreement]]s.
+* '''M3''': Measure '''M2''' plus all other CDs, deposits of eurodollars and repurchase agreements.
-As of March 23, 2006, information regarding M3 will no longer be published by the Federal Reserve. The other three money supply measures will continue to be provided in detail. On March 7th, 2006, Congressman [[Ron Paul]] introduced H.R. 4892 in an effort to reverse this change.<ref>http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.4892:</ref>
-=== United Kingdom ===
-There are just two official UK measures.  M0 is referred to as the "wide monetary base" or "narrow money" and M4 is referred to as "broad money" or simply "the money supply".
-* '''M0''': Cash outside Bank of England + Banks' operational deposits with Bank of England.
-* '''M4''': Cash outside banks (ie. in circulation with the public and non-bank firms) + private-sector retail bank and building society deposits + Private-sector wholesale bank and building society deposits and CDs.v
-==Link with inflation==
-=== Monetary exchange equation ===
-Money supply is important because it is linked to [[inflation]] by the "monetary exchange equation":
-:<math>
-\textrm{velocity} \times \textrm{money\ supply} = \textrm{real\ GDP} \times \textrm{GDP\ deflator}
-</math>
-where:
-*[[income velocity of money|velocity]] = the number of times per year that money changes hands (if it is a number it is always simply nominal GDP / money supply)
-*real GDP = nominal [[Gross Domestic Product]] / GDP deflator
-*[[GDP deflator]] = measure of inflation. Money supply may be less than or greater than the demand of money in the economy
-In other words, if the money supply grows faster than real GDP growth (described as "unproductive debt expansion"), inflation is likely to follow ("inflation is always and everywhere a monetary phenomenon"). This statement must be qualified slightly, due to changes in velocity. While the [[monetarists]] presume that velocity is relatively stable, in fact velocity exhibits variability at business-cycle frequencies, so that the velocity equation is not particularly useful as a short run tool. Moreover, in the US, velocity has grown at an average of slightly more than 1% a year between 1959 and 2005.
-=== Percentage ===
-(excerpted from "Breaking Monetary Policy into Pieces", May 24 2004, http://www.hussmanfunds.com/wmc/wmc040524.htm)
-In terms of percentage changes (to a small approximation, the percentage change in a product, say XY is equal to the sum of the percentage changes %X + %Y). So:
-:%P + %Y = %M + %V
-That equation rearranged gives the "[[basic inflation identity]]":
-:%P = %M + %V - %Y
-Inflation (%P) is equal to the rate of money growth (%M), plus the change in velocity (%V), minus the rate of output growth (%Y).
-==Money Supply and Cash==
-In the U.S., as of [[July 28]], [[2005]], M1 was about $1.4 trillion, M2 about $6.5 trillion, and M3 about $9.7 trillion. If you split all of the money equally per person in the United States, each person would end up with roughly $30,000 ($9,700,000M/300M). The amount of actual physical cash M0 was $688 billion in 2004, roughly double the $328 billion in cash and cash equivalents on [[deposit]] at [[Citigroup]] as of the end of that year and roughly $ 2,125 per person in the US.<ref>http://finance.yahoo.com/q/bs?s=C&annual</ref>
-==The Central Bank==
-The United States supply of money, outside of coins minted by the [[United States Mint]], can increase only if the private banks issue more by loaning into circulation through Fractional Reserve Bank Lending Practices. Subsequently paper notes are increased only as they are printed by the BEP on behalf of the Federal Reserve Fractional Banking System and are swapped at par value by the Federal Reserve Bank with Private Banks for their already issued electronic credits, which are then expunged (some believe retained) from the system by the Federal Reserve Bank. Thus, these printed money tokens (notes) merely replace already issued electronic credits on a one-for-one basis.
-The larger definitions of the money supply, M1, M2, and M3, are types of [[deposit account]]s. The first balance sheet item in a bank is usually deposits. Of the money in a bank deposit, depending on [[reserve requirements]], either the whole sum or some fraction of it can immediately be lent out. The borrower can buy an asset and the seller of that asset can place the proceeds in another money supply constituent [[deposit]]. The money supply has just increased, because both the original and secondary deposits count as part of the money supply. That money can therefore continue to increase many times over. The [[Federal Reserve]] decides the level of "[[reserves of depository institutions]]".
-[[Monetary policy]] has effects on employment and output in the short run, but in the long run, it primarily affects prices.
-===The balance sheets===
-This is what money supply growth may look like starting with 1 new dollar of [[deposits]]. The money is moving from left to right. The Central Bank injects money from its reserve into the economy by buying a government bond from Bank 1 for $1, Bank 1 lends the proceeds to Person 1, who buys an asset from Person 2, who deposits the proceeds at Bank 2, who loans it to Person 3, who buys a service from Person 4, who deposits the proceeds in Bank 1, and the money supply becomes $3.<ref>See, for example, the [[balance sheet]] from [[Citigroup]] Inc. at http://www.citigroup.com/citigroup/fin/ar.htm</ref>
-{| border="0" cellpadding="0" cellspacing="2" align="center" width="" height=""
-|-
-|
-{| border="1" cellpadding="2" cellspacing="0" align="center" width="140px"
-|+''' Central Bank '''
-|-
-! style="background:#efefef;" colspan="2" | Assets
-|-
-| Gov. debt (to B1) || align="right"| $1
-|-
-! style="background:#efefef;" colspan="2" | Liabilities
-|-
-| - || align="right"| -
-|}
-||
-{| border="1" cellpadding="2" cellspacing="0" align="center" width="140px"
-|+'''Bank 1'''
-|-
-! style="background:#efefef;" colspan="2" | Assets
-|-
-| Loan (to P1) || align="right"| $1
-|-
-! style="background:#efefef;" colspan="2" | Liabilities
-|-
-| Deposit (from P4) || align="right"| $1
-|}
-||
-{| border="1" cellpadding="2" cellspacing="0" align="center" width="140px"
-|+''' Person 1'''
-|-
-! style="background:#efefef;" colspan="2" | Assets
-|-
-| Investment (to P2) || align="right"| $1
-|-
-! style="background:#efefef;" colspan="2" | Liabilities
-|-
-| Loan (from B1) || align="right"| $1
-|}
-||
-{| border="1" cellpadding="2" cellspacing="0" align="center" width="140px"
-|+''' Person 2'''
-|-
-! style="background:#efefef;" colspan="2" | Assets
-|-
-| Deposit (to B2) || align="right"| $1
-|-
-! style="background:#efefef;" colspan="2" | Liabilities
-|-
-| - || align="right"| -
-|}
-||
-{| border="1" cellpadding="2" cellspacing="0" align="center" width="140px"
-|+'''Bank 2'''
-|-
-! style="background:#efefef;" colspan="2" | Assets
-|-
-| Loan (to P3) || align="right"| $1
-|-
-! style="background:#efefef;" colspan="2" | Liabilities
-|-
-| Deposit (from P2) || align="right"| $1
-|}
-|}
-==Bank reserves at Central Bank==
-When a [[central bank]] is "easing", it triggers an increase in money supply by purchasing [[government bond|government securities]] on the open market thus increasing available funds for private banks to loan through fractional reserve banking (the issue of new money through loans) and thus grows the money supply. When the central bank is "tightening", it slows the process of private bank issue by selling securities on the open market and pulling money (that could be loaned) out of the private banking sector. It reduces or increases the supply of short term government debt, and inversely increases or reduces the supply of lending funds and thereby the ability of private banks to issue new money through debt.
-The operative notion of easy money is that the central bank creates new [[bank reserves]] (in the US known as "[[federal funds]]"), which let the banks lend out more money. These loans get spent, and the proceeds get deposited at other banks. Whatever is not required to be held as reserves is then lent out again, and through the magic of the "money multiplier", loans and bank deposits go up by many times the initial injection of reserves.
-However in the 1970s the reserve requirements on deposits started to fall with the emergence of [[money market funds]], which require no reserves. Then in the early 1990s, reserve requirements were dropped to zero on [[savings deposit]]s, [[Certificate of deposit|CD]]s, and [[Eurocurrency deposits]]. At present, reserve requirements apply only to "[[transactions deposits]]" - essentially [[checking accounts]]. The vast majority of funding sources used by Private Banks to create loans have nothing to do with bank reserves and in effect create what is known as "moral hazard" and speculative bubble economies.
-These days, [[commercial and industrial loans]] are financed by issuing large denomination [[Certificate of deposit|CD]]s. [[Money market]] deposits are largely used to lend to corporations who issue [[commercial paper]]. Consumer loans are also made using [[savings deposit]]s which are not subject to reserve requirements. These loans can be bunched into securities and sold to somebody else, taking them off of the bank's books.
-The point is simple. Commercial, industrial and consumer loans no longer have any link to bank reserves. Since 1995, the volume of such loans has exploded, while bank reserves have declined.
-In recent years, the irrelevance of open market operations has also been argued by academic economists renown for their work on the implications of [[rational expectations]], including [[Robert Lucas, Jr.]], [[Thomas Sargent]], [[Neil Wallace]], [[Finn E. Kydland]], [[Edward C. Prescott]] and [[Scott Freeman]].
-==Arguments and criticism==
-One of the principal jobs of [[central bank]]s (such as the [[Federal Reserve]], the [[Bank of England]] and the [[European Central Bank]]) is to keep money supply growth in line with real GDP growth. Central banks do this primarily by targeting some inter-bank interest rate (in the U.S., this is the [[federal funds rate]]) through [[open market operation]]s.
-A very common criticism of this policy, originating with the creators of GDP as a measure, is that "real GDP growth" is in fact meaningless, and since GDP can grow for many reasons including manmade disasters and crises, is not correlated with any known means of [[measuring well-being]]. This use of the GDP figures is considered by its own creators to be an abuse, and dangerous. The most common solution proposed by such critics is that money supply (which determines the value of all [[financial capital]], ultimately, by diluting it) should be kept in line with some more ecological and social and human means of [[measuring well-being]]. In theory, money supply would expand when well-being is improving, and contract when well-being is decreasing, giving all parties in the economy a direct interest in improving well-being.
-This argument must be balanced against what is nearly [[dogma]] among economists: that the control of [[inflation]] is the main (or only) job of a central bank, and that any introduction of non-financial means of [[measuring well-being]] has an inevitable [[domino effect]] of increasing [[government spending]] and diluting [[capital (economics)|capital]] and the rewards of gainfully employing capital.
-Currency integration is thought by some economists — [[Robert Mundell]], for example — to alleviate this problem by ensuring that currencies become less competitive in the [[commodity markets]], and that a wider political base be employed in the setting of currency and inflation and well-being policy. This thinking is in part the basis of the [[Euro]] currency integration in the [[European Union]].
-Some economists argue for the money supply to remain constant at all times. With growth in production, this would result in falling prices. A constant money supply will keep nominal incomes constant over time. However, falling prices will lead to an increase in real incomes.
-Money supply remains one of the most controversial aspects of economics itself.
-==United States monetary base==
-[[United States]] [[monetary base]] at the end of September 2004.
-{| border="1" cellpadding="2" cellspacing="0" align="center" width="400px"
-|+''' Monetary base (billions of dollars) (not seasonally adjusted) '''
-|-
-! style="background:#efefef;" colspan="6" | Monetary Base
-|-
-| [[Reserves of depository institutions]] || align="right"| 46.4
-|-
-| [[Reserve balances with F.R. Banks]] || align="right"| 13.0
-|-
-| [[Vault cash surplus]] || align="right"| 11.4
-|-
-| [[Currency]]<ref name="currency">Currency outside [[U.S. Treasury]], [[Federal Reserve Banks]] and the vaults of [[depository institutions]].</ref> || align="right"| 688.2
-|- style="background:#efefef;font-weight:bold;" |
-! Sum || align="right"| 759.0
-|}
-== United States Money Supply ==
-This table shows the United States money supply as reported by the Fed on Sep 30, 2004.
-{| border="1" cellpadding="2" cellspacing="0" align="center" width="400px"
-|+''' Money Supply (billions of dollars)<br/>(not seasonally adjusted) ''' <ref>http://www.federalreserve.gov/releases/H3/20040930/</ref> <ref>http://www.federalreserve.gov/releases/h6/20040930/</ref>
-|-
-! style="background:#efefef;" colspan="6" | M0 (not seasonally adjusted, not adjusted for changes in reserve requirements)
-|-
-| [[Currency]] (The diff between total reserves and the Monetary Base as reported in H.3) <ref name="currency"/> || align="right"| 674.4
-|-
-| Bank's total reserves at the Fed || align="right"| 46.1
-|- style="font-weight: bold;"
-| M0 (Monetary Base) || align="right"| 720.5
-|-
-! style="background:#efefef;" colspan="6" | M1
-|-
-| [[Demand Deposit]]s<ref>Demand deposits at domestically chartered commercial banks, U.S. branches and agencies of foreign banks, and [[Edge Act Corporation]]s (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float.</ref> || align="right"| 321.0
-|-
-| [[Other checkable deposits|Other Checkable Deposits]]<ref>NOW and ATS balances.</ref> || align="right"| 319.5
-|- style="font-weight: bold;"
-| M1 (Monetary Base) || align="right"| 1,361.0
-|-
-! style="background:#efefef;" colspan="6" | M2
-|-
-| [[Savings deposit]]s<ref>Savings deposits include [[money market deposit accounts]].</ref> || align="right"| 3,472.5
-|-
-| [[Small-denomination time deposits]]<ref>Small-denomination time deposits are those issued in amounts of less than $100,000. All [[Individual Retirement Account|IRA]] and [[Keogh]] account balances at [[commercial banks]] and [[thrift]] institutions are subtracted from small time deposits.</ref> || align="right"| 795.6
-|-
-| [[Retail money fund]]s <ref>IRA and Keogh account balances at [[money market mutual funds]] are subtracted from [[retail money funds]].</ref> || align="right"| 729.5
-|-
-! style="background:#efefef;" colspan="6" | M3
-|-
-| [[Institutional money fund]]s || align="right"| 1,071.6
-|-
-| [[Large-denomination time deposits]]<ref>Large-denomination time deposits at [[domestically chartered commercial bank]]s, U.S. branches and agencies of foreign banks, and Edge Act Corporations, excluding those amounts held by [[depository institution]]s, the [[U.S. government]], foreign banks and [[official institution]]s, and [[money market mutual fund]]s.</ref> || align="right"| 1,018.2
-|-
-| [[Repurchase agreement]]s<ref>[[Repurchase agreement|RP]] liabilities of [[depository institution]]s, in denominations of $100,000 or more, on U.S. government and [[federal agency securities]], excluding those amounts held by [[depository institution]]s, the [[U.S. government]], foreign banks and [[official institution]]s, and [[money market mutual funds]].</ref> || align="right"| 537.3
-|-
-| [[Eurodollar]]s<ref>Eurodollars held by U.S. addressees at foreign branches of U.S. banks worldwide and at all banking offices in the [[United Kingdom]] and [[Canada]], excluding those amounts held by depository institutions, the U.S. government, foreign banks and official institutions, and by [[money market mutual funds]].</ref> || align="right"| 322.2
-|- style="background:#efefef;font-weight:bold;" |
-! Sum || align="right"| 9,311.7
-|}
-{| border="1" cellpadding="2" cellspacing="0" align="center" width="400px"
-|+''' Comparable numbers (billions of dollars) (not seasonally adjusted) '''
-|- style="background:#efefef;" |
-! GDP (seasonally adjusted)<ref>http://www.federalreserve.gov/Releases/Z1/Current/accessible/f6.htm</ref> || align="right"| 11,643.0
-|- style="background:#efefef;" |
-! [[Credit market]] Debt Outstanding<ref>http://www.federalreserve.gov/Releases/Z1/Current/accessible/l1.htm</ref> || align="right"| 35,181.7
-|- style="background:#efefef;" |
-! [[Derivative (finance)|Derivatives]] (notional)<ref>http://www.occ.treas.gov/deriv/deriv.htm</ref> || align="right"| 79,400.0
-|}
-The only deposits that have "[[reserve requirements]]" are the M1 "[[checking deposits]]".
+===The United Kingdom===
+Within the [[United Kingdom]], there are just two official money supply measures. M0, which is referred to as the "wide monetary base" or "narrow money," and M4, which is referred to as "broad money" or simply "the money supply." These measures are defined as such:
+* '''M0''': All cash outside the Bank of England plus private banks' operational deposits with the Bank of England.
+* '''M4''': All cash outside banking institutes, either in circulation with the public and non-bank firms, plus private-sector retail bank and building society deposits plus private-sector wholesale bank and building society deposits and certificates of deposits.
-== Discontinuance of M3 Publication Data ==
+==Determination==
+A nation’s money supply is determined by the [[monetary policy]] actions of its [[central bank]]. [[Commercial bank]]s, as required by the central bank, must keep a fraction of all accepted deposits on reserve either in bank vaults or in central bank deposits. Accordingly, a nation’s central bank can maintain control of such reserves by lending to commercial banks and altering the [[rate of interest]] to be charged on such loans. These actions are known as [[open market operations]] and allow central banks to achieve a desired level of reserves.
+In determining a nation’s money supply, its central bank first sets the supply of the monetary base and upholds certain restrictions on the value of assets and liabilities held by smaller commercial banks. Though the consumer demand for liquidity is dictated by the public, small commercial banks are required to meet consumer demand and do so by identifying certain conditions including a set interest rate which apply to the loaning of bank liabilities. Commercial bank behavior, ultimately regulated by the nation’s central banking institution, and conjunction with consumer demand define the total stock of money, bank credit, and rates of interest which shape national economic conditions.
-In a press release dated 10 November, 2005, the Board of Governors of the Federal Reserve System announced that it would cease publication of the M3 monetary aggregate.<ref>http://www.federalreserve.gov/releases/h6/discm3.htm</ref> The Board stated that M3 "does not appear to convey any additional information about economic activity that is not already embodied in M2," and that the decision was reached largely because "the costs of collecting the underlying data and publishing M3 outweigh the benefits."
+The value of the money supply is determined by the money multiplier and the monetary base. The monetary base consists of the total quantity of government-produced money and includes all [[currency]] held by the public and reserves held by commercial banks. The central bank retains tight control over its nation’s money supply through the use of open market operations, the discount rate, and reserve requirements.
-== Latest US M3 numbers ==
+===Money Multiplier===
+The money multiplier is jointly determined by the economic behavior of consumers, [[commercial bank]]s, and the [[central bank]]. Factors which limit the money multiplier include consumer expectations and their decisions to hold money, and the liquidity preferences of commercial banks to hold excess reserves. In short, the money multiplier must account for various levels of consumer demand, private bank demands, and any resulting [[market]] conditions.
-According to the last published data from 16 March, 2005, M3 has been growing at an annual rate of over 8.22%.<ref>https://research.stlouisfed.org/fred2/data/M3.txt</ref> As of 16th March 2006 M3 was $10.34 trillion.  One year earlier, on 14th March 2005 the M3 was $9.55 trillion.
+The value of the money multiplier is directly related to consumer behavior in that an increase in the demand for money will subsequently decrease the size of the money multiplier. An increase in the demand for excess reserves by private banks will also diminish the money multiplier, decreasing with it the value of the money supply, the amount of bank loans, and deposits. Changes in the money multiplier represent short-run fluctuations and often denote temporary changes to the total money supply.
-==Controlling money supply by issuing debt==
+===Monetary Base===
-The government can control the growth of M3 through the issuance of new Government [[treasury securities|debt instruments]].  Money which is re-invested back into US Government debt—such as treasury bonds and treasury bills—ceases to be part of M3.  Thus, if a government wishes to slow the growth of M3, and thus prevent the economy from overheating, it can raise interest rates, and, therefore, withdraw money from M3 and transfer it into Government debt.  Between 14, March 2005 and 16, March 2006 total US National Debt rose by 6.71% from $7.75 trillion to $8.27 trillion.  These figures inform us that the actual issuance of money exceeded the increase in M3.
+A nation’s monetary base constitutes its total money supply. It defines the volume of money within the economy and is comprised of [[currency]], banknotes, [[coin]]s, and commercial bank reserves held by the central bank. A narrow definition of the money supply, the monetary base consists of only the most liquid forms of [[money]] and can be controlled by a nation’s [[central bank]] through its use of monetary policy in particular the employment of [[open market operation]]s.
-In March of 2006, the US Congress agreed to raise the [[U.S. public debt|National Debt Ceiling]] an additional $781 billion and, thus, prevent a first-ever default on US Treasury notes.<ref>http://news.yahoo.com/s/cpress/20060317/ca_pr_on_wo/us_deeper_in_debt</ref>  As of 15 April, 2006, The National Debt Ceiling stands at just under $9 trillion.
-==ECB Target==
+==Central Bank Policies==
-The [[European Central Bank]] has set a target rate of 4.5% for M3 growth but has overshot that target by almost double since the inception of the Euro.<ref>http://www.ecb.int/home/html/index.en.html</ref>
+A nation’s money supply is closely tied to all levels of its economic activity. Short-run changes in a nation’s money supply may prove to have immediate economic effects on employment levels, output levels, and real income levels, while the long-run behavior of a nation’s money supply often determines levels of price [[inflation]]. Increases in a nation’s money supply have been shown to increase levels of aggregate [[demand]], raising with it spending levels, production, the demand for [[labor]] and for [[capital]] goods. A decrease in a nation’s money supply has been shown to reverse such effects&mdash;consumer demand falls, spending levels tighten and the level of economic activity declines. A nation’s central bank can alter is total money supply by employing open market operations, changes in the discount rate, or alterations to reserve requirements.
-=== Expanding the paper money supply ===
+===Open Market Operations===
-See also [[inflation]].
+Open market operations, the most dominant instrument of monetary policy, is the behavior of a nation’s [[central bank]] to trade or purchase government securities for cash in attempts to expand or contract the total money supply. While purchases of government securities prove to expand the total monetary base, the selling of government securities will ultimately contract a nation’s monetary base.
-Historically money was a metal (gold, silver, copper, etc,) or other object that was difficult to duplicate, but easy to transport and divide. Later it consisted of paper notes, now issued by all modern governments.  With the rise of modern industrial capitalism it has gone through several phases including but not limited to:
+===Reserve Requirements===
+Under fractional reserve banking, a nation’s [[central bank]] is responsible for holding a certain fraction of all deposits as cash or on account with the central bank. Central banks may alter the total money supply by changing the required percentage of total deposits to be held by [[commercial bank]]s. An increase in reserve requirements would decrease the monetary base; a decrease in the requirements would increase the monetary base.
-#Bank notes - paper issued by banks as an interest-bearing loan. (These were common in the 19th century but not seen anymore.)
+===Discount Rate===
-#Paper notes, coins with varying amounts of precious metal (usually called [[legal tender]]) issued by various governments. There is also a near-money in the form of interest bearing bonds issued by governments with solid credit ratings.
+A nation’s [[central bank]] is also responsible for supplying [[commercial bank]]s with enough currency to meet consumer [[demand]]. By controlling the national [[interest rate]], a central bank can adequately meet and further dictate the consumer demand for money. A decrease in the interest rate will spark an increase in the consumer demand for money; an increase in the rate of interest will lessen its demand. Changes in the interest rate also play a role in the setting of [[price]] levels. Any increase in the demand for money will increase spending levels and cause prices to rise. A decrease in the demand for money will slow spending levels and produce a subsequent decrease in price levels. If consumers expect price levels to fall, the demand for money will increase. If consumers expect price levels to increase, the demand for money will decline.
-#Bank credit through the creation of chequable deposits in the granting of various loans to business, government and individuals. (It is critical that we understand that when a bank makes a loan, that is ''new'' money and when a loan is paid off that money is destroyed.  Only the interest paid on it remains.)
-Thus, all debt denominated in dollars — mortgages, money markets, credit card debt, travelers cheques — is money. However, the creation of dollar-denominated debt (or any generic obligation) creates money only when a bank (as opposed to a credit card
+==Monetary Objectives==
-company) is granting the debt. "High powered" money (M0) is created when the elected government spends money
+Though a nation’s money supply delineates the total amount of [[money]] within a national economy, nations also employ various methods or principles to measure their total money stock. Similarly, a nation’s [[central bank]]ing institution retains various monetary objectives to ensure national economic stability. Some objectives belonging to the [[Money supply#The Federal Reserve|Federal Reserve]], the [[Money supply#The Bank of England|Bank of England]] and the [[Money supply#The European Central Bank|European Central Bank]] are listed below.
-into the economy.  The money created in the bank loan process is bank money and these
-two forms of money trade at par one with the other.  Banks are limited in the amount
-of loans they can grant and thus in the amount of bank money (credit) they can
-create by both the net assets of the bank and by reserve requirements (M0).
-For most intents and purposes the aggregate of M0 multiplied by the reserve requirement
-will be an indicator of (but this is somewhat greater than) the aggregate of loans.  If additional money is needed in the
-banking system to allow more loans the Federal Reserve will create money by purchasing Bonds or
-T-bills with money created from the other.  No matter who sells the bonds the
-money will end up in the banking system as M0.  The Fed could purchase lolly pops
-if that would accomplish the purpose of expansion better than a purchase of
-Bonds.
-=== Shrinking the paper money supply ===
+===The Federal Reserve===
-See also [[deflation]].
+The U.S. [[Federal Reserve]] is responsible for monitoring the money supply of the [[United States]]. When aiming to expand the U.S. money supply by means of expansive [[monetary policy]], the Federal Reserve adds more reserves to the banking system in order to allow private banks more liquidity and ensure their ability to issue loans. The Federal Reserve aims to foster economic growth within the United States by maintaining stability within the national money supply and regulating the actions of private banking institutions throughout the U.S.
-Perhaps the most obvious way money can be destroyed is if paper bills are burned or taken out of circulation by the central bank. But, it should be remembered that legal tender usually constitutes less than 4% of the broad [[money supply]].
+===The Bank of England===
+The [[Bank of England]] is the [[central bank]]ing institution of the [[United Kingdom]], retaining control over its money supply and the determination of its [[interest]] rate. The Bank of England is responsible for controlling the U.K.’s [[foreign exchange]] rates and [[gold reserve]]s and aims toward ensuring monetary and financial stability. The interest rate set by the Bank of England is set through financial market operations and dictates the rate at which the Bank of England lends credit to various financial institutions. The Bank retains a [[monopoly]] on the issuance of banknotes within the United Kingdom and, under the Bank’s Monetary Policy Committee, aims to set a general interest rate that meets an overall economic inflation target.
-Current banking systems are based on fractional reserves so money can be destroyed if depositers withdraw funds from a bank.  When money is withdrawn it can no longer be used for lending and just as the fractional reserve system gives leverage to the creation of money, it also gives leverage to the destruction of money. Bank [[savings]] are actually a kind of loans &mdash; savers loan their money to a  bank at a low interest rate or merely in exchange for the benefit of convenience or its security (accepting that they lose a small amount of value to inflation). The bank may use this loan to manage its liabilities (its deposit liabilities created by loans).  It must be recalled that the federal reserve banking system is ''mostly'' a closed system.  A check written on bank A gets deposited in Bank B and a check written on bank B gets deposited in Bank C and a check on bank C gets deposited in bank A. On a good day very little borrowing needs to be done because a bank gets as much in new deposits as it does in paid out funds.  Even if a bank is short of reserves it can borrow the reserves from another bank at the ''discount'' rate.
+===The European Central Bank===
+The [[European Central Bank]] (ECB), is responsible for controlling the money supply and setting the rate of [[interest]], or the discount rate, for the countries that comprise the [[European Union]]. The main objective of the ECB is to ensure price stability and to limit inflationary pressures that constrain consumer purchasing power throughout the EU. In order to maintain economic health, contemporary ECB policies have targeted annual [[inflation]] rates that ensure less than two percent increases in consumer price levels. By retaining tight control of the money supply to limit inflation levels, and by further monitoring present and past [[price]] trends, the ECB aims to adequately assess the risks to price stability and attempt to assuage them.
-Another way money can be destroyed is when any bank loan is paid off or any government bond or T-Bill is purchased by the private sector. The money value of the contract or bond is destroyed &mdash; taken out of circulation.  If a bank loan is [[default (finance)|defaulted]] upon then the "interest" paid by other borrowers will be employed to cover the default.  A very large part of the "interest" paid on bank loans is actually a finance charge employed to cover bad loans.  The group of good borrowers pay the loan instead of the original borrower.  In cases where the default is huge such as loans to foreign governments Fed intervention has, in the past, rescued the banks.  In this instance it would seem that the taxpayers and/or money holders (savers) will pay the debt.  The effects on the money supply will be controlled, again, by the level of bond purchase or redemption or the level of T-Bill sales or purchases by the Treasury.
+==Policy Criticism==
+[[Image:Us proportionate m3.svg|thumb|left|250 px|U.S. M3 money supply as a proportion of gross domestic product.]] One of the principal jobs of [[central bank]]s, such as the U.S. [[Federal Reserve]], the [[Bank of England]] and the [[European Central Bank]], is to keep money supply growth in line with real [[Gross Domestic Product]] (GDP) growth. Central banks do this primarily by targeting some inter-bank interest rate. In the United States, this is the federal funds rate obtained through the use of [[open market operation]]s.
-In extreme forms, a [[bank run]] or panic may drive a bank into [[insolvency]] and, if uninsured, the savings of all its [[deposit]]ors are lost. Such bank failures were a major cause of the tremendous contraction in the money supply that occurred during the [[Great Depression]], particularly in the United States. In that country many [[bank reform|banking reforms]] were subsequently enacted during the [[New Deal]], including the creation of the [[Federal Deposit Insurance Corporation]] to guarantee private bank deposits.
+A very common criticism of this target policy is that "real GDP growth" is, in fact, meaningless and since GDP can grow for many reasons including man-made disasters and crises, is not correlated with any known means of measurement well-being. The policy use of GDP figures is considered to be an abuse, and a common solution proposed by such critics is that a nation’s money supply should be kept in line with a more ecological, social and human mean of well-being. In theory, money supply would expand when well-being is improving and contract when well-being is decreasing. Proponents believe this policy to give all parties in the economy a direct interest in improving well-being.
-===Articles and books===
+This argument must be balanced against the standard view among economists: that the control of [[inflation]] is the main job of a central bank, and that any introduction of non-financial means of measuring well-being has an inevitable "domino effect" of increasing [[government]] spending and diluting [[capital]].
-* [http://chevallier.turgot.org/a363-Monetary_creation_aggregates_and_GDP_growth.html  '''Monetary creation, aggregates and GDP growth''']  On the inverse relation between Excess Money Supply and Growth. - '' J.P. Chevallier''
-==Notes and references==
+[[Currency]] integration is thought by some economists, including [[Nobel Prize]] winner [[Robert Mundell]], to alleviate this problem by ensuring that currencies become less competitive in the commodity [[market]]s, and that a wider [[politics|political]] base be employed in the setting of currency and [[inflation]] and well-being policy. This thinking is in part the basis of the [[Euro]] currency integration within the [[European Union]].
-<div class="references-small">
-<references />
-</div>
-==External links==
+Some economists argue for the money supply to remain constant at all times. With growth in production, this would result in falling prices. A constant money supply would keep nominal incomes constant over time; however falling prices lead to an increase in real incomes. Due to such conflict, policy regarding a nation’s money supply remains one of the most controversial aspects of [[economics]] itself.
-===Data===
-*[http://www.bullandbearwise.com/MoneySupplyChart.asp Trailing Five-Year U.S. Money Supply Chart]
-*[http://www.bullandbearwise.com/MoneySupplyChgChart.asp Trailing Five-Year U.S. Money Supply Rate of Change Chart]
-*[http://www.federalreserve.gov/releases/h3/Current/h3.htm Aggregate Reserves Of Depository Institutions And The Monetary Base (H.3)]
-*[http://www.federalreserve.gov/releases/h6/hist/h6hist1.txt U.S. M1,M2 Money Supply Historical Table]
-*[http://www.federalreserve.gov/releases/h6/current/h6.htm Money Stock Measures (H.6)]
-*[http://www.rba.gov.au/Statistics/AlphaListing/alpha_listing_m.html Data on Monetary Aggregates in Australia]
-===Articles===
+==References==
-*[http://www.frbsf.org/education/activities/drecon/2001/0111.html Do all banks hold reserves, and, if so, where do they hold them? (11/2001)]
-*[http://www.frbsf.org/education/activities/drecon/2001/0108.html What effect does a change in the reserve requirement have on the money supply? (08/2001)]
-*[http://research.stlouisfed.org/aggreg/ St. Louis Fed: Monetary Aggregates]
-*[http://www.econlib.org/library/Enc/MoneySupply.html Anna J. Schwartz on money supply]
-*[http://www.federalreserve.gov/releases/h6/discm3.htm Discontinuance of M3 Publication]
+*Federal Reserve Bank of New York. [http://www.ny.frb.org/aboutthefed/fedpoint/fed49.html ''The Money Supply'']. Retrieved July 20, 2007.
+*Hussman, John P. ''Breaking Monetary Policy into Pieces''. Hussman Funds Weekly Market Comment. [http://www.hussmanfunds.com/wmc/wmc040524.htm Hussman Funds] Retrieved July 20, 2007.
+*Ingham, Geoffrey. ''The Nature of Money''. Polity Press, 2004. ISBN 074560997X
+*Mzumara, Macleans. ''The Theory of Money and Banking in Modern Times''. Tate Publishing & Enterprises, 2006. ISBN 1933290021
+*Schwartz, Anna J. ''Money in Historical Perspective''. Chicago, IL: University Of Chicago Press, 1989. ISBN 0226742288
+*Schwartz, Anna J. [http://www.econlib.org/library/Enc/MoneySupply.html ''Money Supply'']. The Concise Encyclopedia of Economics. Retrieved July 20, 2007.
+==External Links==
+All links retrieved November 9, 2022.
+*[http://www.frbsf.org/education/activities/drecon/2001/0111.html Do All Banks Hold Reserves, and, if so, Where Do They Hold Them? (11/2001)]
+*[http://www.federalreserve.gov/releases/h6/current/h6.htm Money Stock Measures (H.6)]
+*[http://www.bullandbearwise.com/MoneySupplyChart.asp Trailing Five-Year U.S. Money Supply Chart]
+*[http://www.bullandbearwise.com/MoneySupplyChgChart.asp Trailing Five-Year U.S. Money Supply Rate of Change Chart]
+*[http://www.frbsf.org/education/activities/drecon/2001/0108.html What Effect Does a Change in the Reserve Requirement Have on the Money Supply? (08/2001)]
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