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Finance allah shmoop what are m one m two and

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m three Weren't those models of beamers are none None

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And all right well maybe they're not james bond security

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clearance things or the name of the cia soccer team

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How about that M five m six and maybe not

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okay and one two and three are just different measures

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or gradations for how we count the money supply in

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the economy Think of these m numbers is analog is

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teo def con one is like get ready for nuclear

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war and def con five is like you know well

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all is well on ly the m numbers here relate

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to liquidity e how closely those m numbers approximate the

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easily immediately available cash in the economy So em one

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reflects the most liquid number and just includes paper currency

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like you know dolla dolla bills and callings and things

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like checking accounts in banks where you can walk in

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and in an hour or less get a load of

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cash we'll em one represents a relatively small slice of

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the total m number in the economy or about one

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and a half trillion box And yes that's a lot

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Of nickels but it's relatively small in the kissing twenty

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trillion dollars u s economy em two adds to the

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m one totals What's called near money like the money

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market securities savings deposits longer duration deposits like six month

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cds up to one hundred grand and stuff like that

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well em to totals almost eight trillion box these days

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And kind of make sense People sock away more money

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in cds and short term paper than they would dollar

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bills in your wallet Right And it's A big delineation

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Why Well it can be converted to money I'ii converted

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to m one quickly So that's what those cds are

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m three is the biggest slice of pie like mohr

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savings bigger volumes and longer term duration Commitment to making

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that two percent a year whatever you make these days

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So m three includes stuff like time deposits more than

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one your grand at euro dollar deposits over a hundred

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grand Other things that can take more than a day

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roughly to be converted into cash So m three is

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somewhat less liquid than him One and two Got it

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Well as long as all that makes sense to you 00:02:14.758 --> [endTime] Then well you know all is well

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