“Money” actually includes various forms of payment—not just coins, bills, credit, and checks. This DataPost tutorial walks through the various types of payment that contribute to our notion of “money” in the United States.

1. The Money Supply
Measuring M1 & M2
Federal Reserve Bank of San Francisco
Economic Education
Date last updated: September 14, 2020
DATAPOST

2. Money Supply – Did You Know?
As a share of the total values
shown above, M1 dropped
from 26% in 1980 to 20% in
2010.1
Used
•By households and businesses
•To make payments and to be held as
short-term investments
Components
•M1 = coin and currency in circulation,
plus checking accounts
•M2 = M1 plus short-term liquid
assets
Context
•The Fed uses M1 and M2 as a
standardized way of defining money
in the economy
$1.54
$3.22
$4.78
$8.61
$0
$2
$4
$6
$8
$10
$12
1980 1990 2000 2010
M1 and M2
($trillions, non-seasonally adjusted)
M2-M1
M1
Source: Federal Reserve Board
1. See PowerPoint file for technical note.
www.frbsf.org/education/teacher-resources/datapost FRBSF Economic EducationDATAPOST

3. Money Supply – Components
• Savings Deposits
• Time Deposits
• Certain CDs
• Money Market
Deposit Accounts
• Money Market
Mutual Funds
• Includes M1
M2
• Coin
• Currency
• Demand Deposits
• Travelers Checks
M1 $5.40 $5.40
$13.02
$0
$4
$8
$12
$16
$20
M1 M2
M2-M1
M1
August 2020
($trillions, seasonally adjusted)
Source: Federal Reserve Board
www.frbsf.org/education/teacher-resources/datapost FRBSF Economic EducationDATAPOST

4. $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000
Other Checkable
Deposits, $1,197
Demand Deposits,
$2,286
Currency and Coins,
$1,913
Retail Money
Market Funds,
$1,106
Small-Denomination
Time Deposits, $363
Savings Deposits,
$11,548
M2 in Detail
August 2020 ($billions, seasonally adjusted)
M1 components of M2
Source: Federal Reserve Board 9/10/20 data release
Note: Components may not add to totals due to rounding
www.frbsf.org/education/teacher-resources/datapost FRBSF Economic EducationDATAPOST

5. $0
$4
$8
$12
$16
$20
1980 1985 1990 1995 2000 2005 2010 2015 2020
M2-M1
M1
M2
Source: Federal Reserve Board 9/10/20 data release
Trends — M1 and M2
Jan. 1980 to Aug. 2020 ($trillions, seasonally adjusted)
M1
www.frbsf.org/education/teacher-resources/datapost FRBSF Economic EducationDATAPOST

6. What Do You Think?
1. How much cash (coin + currency) do you
currently have in your pocket, wallet, or purse? Is
this cash part of M1 or M2?
2. Do you have a checking account? Is the balance
in your checking account part of M1?
3. Do you have a savings account? Is your savings
account balance part of M1?
4. How would you describe the trends of M1 and
M2 since 1980? (See slide 5)
www.frbsf.org/education/teacher-resources/datapost FRBSF Economic EducationDATAPOST