Quote:
Originally Posted by Zurvan
I been reading some stuff about economics, inflation & the money supply.
They talk about M1 & M2. Can anybody explain the difference so that an idiot could understand?
Sure. M1 is cash + bank accounts that you can write checks on or draw on with a debit card. M2 is M1 + other accounts that are immediately withdrawable (savings, money markets). The distinction is that M1 is the sort of stuff that you typically settle transactions (read: buy groceries) with in real life. M2 is money that you could use to settle transactions if you had a bit of lead time (you could convert it to cash or move it to your checking account) if you needed, but typically aren't used for that function.