Lets cut through the noise and set the record straight about M1, M2, and M3 money supply and how it drives inflation.
Its a shame that our education system and media havent made this crystal clear from an early age. Its basic knowledge that everyone should have, but somehow, its been ignored.
M1: This is the most liquid form of money. It includes physical currency, demand deposits, and other liquid assets that are readily convertible to cash.
M2: A step beyond M1, M2 includes everything in M1 plus savings deposits, money market securities, and other near-money assets. Its a broader measure of the money supply.
M3: This is the widest indicator. Along with everything in M2, M3 encompasses large time deposits, institutional money market funds, and larger liquid assets. Its used by economists to estimate the entire money supply within an economy.
Heres the deal: An unprecedented increase in these money supplies directly correlates with inflation. Its not rocket science, yet its often overlooked in mainstream discussions. Too many people are quick to blame inflation on other factors, but theyre missing the point. The evidence is clear, and its about time we start acknowledging the true drivers of inflation instead of getting distracted by other narratives. The science on this is as settled as it gets.
“This image powerfully captures the stark divide between the wealthy elite and the working class in the context of economic disparity. At the center, a large, sophisticated money printing machine symbolizes the source of wealth. Around it, the rich, dressed in luxurious attire, are directly accessing and benefiting from the freshly printed money, visibly prospering and exuding a sense of opulence.
In sharp contrast, at the outer edges of the scene, the working class is depicted in a state of increasing impoverishment. These individuals, distanced from the money printer, exhibit expressions and postures of despair and economic decline. The scene is a poignant illustration of the widening economic gap, where those close to the money supply thrive, while those further away face the adverse consequences of diluted wealth and growing inequality.”
DALL-E Open Ai