– Currency (coins and paper money) in the hands of the public.
– All checkable deposits (all deposits in commercial banks and “thrift” or savings institutions on which checks of any size can be drawn).
Money, M1 = currency + checkable deposits
– savings deposits, including money market deposit accounts
– small-denominated (less that $100,000) time deposits
– money market mutual funds held by individuals
Money, M2 = M1 + savings deposits, including MMDAs + small-denominated (less that $100,000) time deposits + MMMFs held by individuals
Monetary authority who controls the Money Supply (MS) for our country.
Serves as the central authority; 7 Board Members appointed by US President.
– The seven members of the Board of Governors
– The president of the New York Federal Reserve Bank
– Four of the remaining presidents of Federal Reserve Banks on a 1-year rotating basis.
Commercial Banks, Thrifts, Insurance Companies, Mutual Fund Companies, Pension Funds, Securities Firms, and Investment Banks
Mutual Fund Companies
Banks lost money from loans to investment firms who bought mortgage-backed securities.
For example, in runaway inflation: