But the average person may be confused by so many definitions of the money supply. What are all the Ms about, from M1- A and M1-B up to M-8? Which is the
dominant part of the money supply? Everyone knows that paper dollars, issued nowadays exclusively by the Federal Reserve Banks and imprinted with the words “this note is legal tender for all debts, public and private” constitute money. But why are checking accounts money, and where do they come from? Don’t they have to be redeemed in cash on demand? So why are checking deposits considered money, and not just the paper dollars backing them?
No comments:
Post a Comment