The Biggest Collapse in M2 Money Supply Since the Great Depression – Mish Talk


Data for the chart above comes from the Fed’s H.6 Money Stock Report, released Jan. 24.

Monetary definitions

  • M1 consists of (1) currencies outside the US Treasury, Federal Reserve Banks and depository vaults; (2) demand deposits with commercial banks (excluding amounts held by depository institutions, the U.S. government and foreign banks and official institutions) less cash items collected and the Federal Reserve float; and (3) other liquid deposits, consisting of other checkable deposits (or OCDs, which consist of negotiable order of withdrawal, or NOW, and direct debit, or ATS, accounts with custodians, exchange accounts with credit unions, and demand deposits with thrift stores) and savings deposits (including money market deposits). Seasonally adjusted M1 is constructed by adding currency, demand deposits and other liquid deposits, each individually seasonally adjusted.
  • M2 consists of M1 plus (1) small denomination term deposits (term deposits for amounts less than $100,000) minus the Individual Retirement Account (IRA) and Keogh balances with custodial institutions; and (2) money market fund (MMF) balances less IRA and Keogh balances with MMFs. Seasonally adjusted M2 is constructed by summing small denomination term deposits and retail MMFs, each individually seasonally adjusted, and adding the result to seasonally adjusted M1.
  • ODL is described below
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