What is M1 Money Supply Today in the USA?
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By Alan Myers
”There are two ways to conquer and enslave a nation. One is by the sword, the other is by debt.” John Adams.
- WHAT IS NOT INCLUDED IN THE M1 MONEY SUPPLY?
The M1 Money supply does not include the electronic digits in savings accounts, retirement accounts and pension plans. These types of Money are included in the M2 Money supply. M2 Money is not considered to be on demand or immediately available to complete a financial transaction as is M1 Money.
- WHO DOES NOT HOLD M1 MONEY?
According to the Fed, all the cash and coin held by the U.S. Treasury, the 12 Fed banks and all the commercial banks is not include in the M1 Money supply. This means, all the cash and coin held by these institutions IS NOT M1 MONEY, and therefore, is not Money.
All the electronic digits in all the checking accounts held by depository institutions, the U.S. government and foreign banks are also not included in the M1 Money supply. This means that all the electronic digits held by these institutions IS NOT M1 MONEY, and therefore, is not Money.
In other words, all the commercial banks, all 12 Fed banks and the U.S. Treasury, literally, by definition, have no Money of their own or in their own name. Below is Note 1 from Table 1 of the Federal Reserve Statistical Release, date November 12, 2015, that supports this statement.
M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) traveler’s checks of nonbank issuers; (3) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (4) other checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts, and demand deposits at thrift institutions. Seasonally adjusted M1 is constructed by summing currency, traveler’s checks, demand deposits, and OCDs, each seasonally adjusted separately.
- IF THESE INSTITUTIONS HAVE NO MONEY, WHAT DO THEY HAVE?
Banks and the U.S. Treasury have what are called Reserves. All Reserves are created and are extinguished as nothing more than electronic digits in an entity’s computerized accounting system, general ledger. The Fed banks have neither Money or Reserves and they have no need for either because the Fed banks create all the Reserves they need. By creating Reserves, the Fed banks can acquire any assets and satisfy any expense with nothing more than fingertips on a keyboard, hit enter.
The Take Away – Banks and the U.S. Treasury have no Money of their own in their own name, they only have Reserves. The Fed banks have no Money and no Reserves in their own name. Only people have and use Money to acquire goods and services – only people.
Alan Myers is a San Diego CPA and forensic accountant. For 8 years, he has dedicated himself to researching, studying and analyzing the Federal Reserve System, banking and the national debt. He is a writer, speaker and radio commentator on these and other related topics. You can contact Alan at: Alan Myers, CPA [email protected]
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