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40% of Money was Printed in the Last 12 Months!
Economic Data Literacy
I am breaking away from the normal scheduled Tuesday morning posts to share some information that was helpful for me this past week. I taught money, banks, and the Federal Reserve in my Principles of Macroeconomics course. Obviously, the viral TikTok/Reel that claims that 40% of all Dollars were printed in the past 12 months came up. If you haven’t seen it, check out my correction to the video on Instagram and TikTok (@DrAalbahrani). H/T to Susan Reilly for sharing this information.
The Federal Reserve has shared information on how the calculation of M1 has changed. Full post here.
Before April 24, 2020, savings accounts were not part of M1. Limitations in the number of transfers from savings deposits made savings accounts less liquid than M1. M1 consisted of currency, demand deposits, and other highly liquid accounts called “other checkable deposits” (OCDs). An example of OCDs are the demand deposits at thrifts.
While M1 has increased drastically, it is only because the way it is measured has changed. M2 has increased during the pandemic but not as much as the viral social media posts have claimed.
This is another win for those of us that invest in economic education and economic data literacy. It is important for our students, friends, and family to know how economic data is collected and about any changes in how data is measured.
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