what is the money supply 
the money supply is the sum total of all of the currency and other liquid assets in a country s economy on the date measured the money supply includes all cash in circulation and all bank deposits that the account holder can easily convert to cash governments issue paper currency and coins through their central banks or treasuries or a combination of both in order to keep the economy stable banking regulators increase or reduce the available money supply through policy changes and regulatory decisions investopedia madelyn goodnightthe federal reserve website has a running account of the u s money supply month by month going back to 1999 the fed refers to the money supply as the money stock 1understanding money supplyin the united states the federal reserve known as the fed is the policy making body that regulates the money supply its economists track the money supply over time in order to determine whether too much money is flowing which can lead to inflation or too little money is flowing which can cause deflation the fed has a couple of tools it can use to keep the economy growing at a reasonable pace the money supply is tracked over time as a key factor in analyzing the health of the economy pinpointing its weak spots and developing policies to correct weaknesses in its public releases the fed generally refers to the money supply as the money stock as of march 2024 the seasonally adjusted m1 money supply was 17 99 trillion according to the federal reserve 2effect of money supply on the economyan increase in the supply of money typically lowers interest rates which in turn generates more investment and puts more money in the hands of consumers thereby stimulating spending businesses respond by ordering more raw materials and increasing production the increased business activity raises the demand for labor the opposite can occur if the money supply falls or when its growth rate declines banks lend less businesses put off new projects and consumer demand for home mortgages and car loans declines change in the money supply has long been considered a key factor in driving economic performance and business cycles macroeconomic schools of thought that focus heavily on the role of money supply include irving fisher s quantity theory of money monetarism and austrian business cycle theory historically measuring the money supply has shown that there are relationships between money supply and inflation and between money supply and price levels however since 2000 these relationships have become less predictable reducing their reliability as a guide for monetary policy although money supply measures are still widely used they are among a number of economic measures that economists and the federal reserve collect track and review 3the money supply numbers m1 m2 and beyondthe federal reserve tracks two distinct numbers on the nation s money supply and labels them m1 and m2 each category includes or excludes specific kinds of money there was yet another number m3 but its reporting was discontinued by the fed in 2006 there s also m0 and mb but these are generally included in the main categories rather than being reportedly separately all of the categories are an accounting of the amount of cash in the economy but each category has a slightly different definition of cash or liquid assets m1 also called narrow money is often synonymous with money supply in reports from the financial media this is a count of all of the notes and coins that are in circulation whether they re in someone s wallet or in a bank teller s drawer plus other money equivalents that can be converted easily to cash a regular bank savings account for example is a money equivalent the account holder can convert those savings to cash at any time and instantly m2 includes m1 plus short term time deposits in banks and money market funds generally terms of less than a year are considered short term m3 m0 and mb are not separately represented in the federal reserve reports on money supply the federal reserve releases the latest numbers on m1 and m2 money supplies on a weekly and monthly basis the numbers are reported widely by the financial media and are published on the fed s website 