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Author: ccaawwss Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 264938  
Subject: M1, M2, M3 Money supply Date: 1/5/2001 11:47 AM
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Could someone please explain to me why there are three measures for the money supply. Thanks!
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Author: QuillandPenn Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 151397 of 264938
Subject: Re: M1, M2, M3 Money supply Date: 1/5/2001 11:53 AM
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ccaawwss,

Let's review the following for more information.

http://invest-faq.com/articles/regul-fed-m123.html
http://www.google.com/search?q=M1%2C+M2%2C+M3+Money+supply&btnG=Google+Search

Enjoy,
QuillandPenn

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Author: JEHalm Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 151406 of 264938
Subject: Re: M1, M2, M3 Money supply Date: 1/5/2001 12:03 PM
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M1, M2 and M3 are referred to as the money aggregates which the Federal Reserve (The Fed) use to measure money and develop monetary policies (i.e., cuts or increases in interest rates). Because there has been substantial additions to the differing types of assets that a person may hold, the Fed decided on these three aggregates.

M1 = Currency + travelers checks + demand deposits (checking accounts)

M2 = M1 + small CDs + savings accounts + personal money market accounts

M3 = M2 + Large CD's + institutional money market mutual funds + repurchase aggreements + Eurodollars

The difference between these measures are important as the Fed will set policies aimed at a specific aggregate which they feel is in need of fine tuning.

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