> >> So when tallying up "the money supply," I would not count both a gold > >> coin in a vault AND a paper note redeemable for that coin. > > > > That's the difference between M1 and M2 isn't it? > > I don't see the analogy with warehouse receipts. M1 itself is a > mish-mash created by printing presses and fractional reserve lending; > M2 is an additional mish-mash involving short-term money market > investments of the aforementioned mish-mash. > >[...] > > Please explain.
I wasn't making such a detailed observation. I am simply pointing out that there are several definitions for 'money', each of which has use. If gold were widely used as money, would you ever have a reason to include all the gold in all the vaults as part of the money supply? Sure you would, if you were trying to get a measure of the overall size of the money supply and subsequently its growth from year to year. Likewise, would you ever have a reason to include only notes redeemable for the gold? Again, the answer is 'yes', if you were trying to find total money in circulation, since the notes circulate as money, too. I seem it as similar to the difference between M1 and M2. M1 is the total amount of cash circulating in society and M2 includes other types of liquid assets like checking account balances, which are directly convertable to cash. Monitoring the size and growth of each are valuable to economists. Sincerely, Craig --- You are currently subscribed to e-gold-list as: [EMAIL PROTECTED] To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
