The Money Supply (Monetary Base, M1 and M2) Defined & Explained in One Minute
There's just so much confusion surrounding the money supply that it isn't even funny. What's the monetary base? What are M1 and M2? What's the difference between the money supply and the monetary base?
... the list could go on and on.
Today, I've taken things one step at a time by initially defining and explaining the money supply. I've then moved on to the definition and explanation of the monetary base, of M1 as well as M2.
Finally, I did my best to help people figure out how to interpret central banking decisions and outcomes through a proper understanding of the monetary supply. For example, the effects of QE on the monetary base compared to its effects on M1 and, finally, its effects on M2.
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