Money Growth and Inflation

M1

Monetary aggregate representing physical cash, demand deposits, and other liquid instruments.

M2

Monetary aggregate that includes M1 plus savings accounts, time deposits, and retail money market funds.

M3

Monetary aggregate that includes M2 plus large time deposits, institutional money market funds, and other larger liquid assets.

Velocity of Money

The frequency at which money is spent in a given time period, influencing overall economic activity.

Real GDP

The total value of all goods and services produced in an economy adjusted for inflation.

Central Bank

National authority responsible for regulating the money supply and interest rates; includes entities like the Federal Reserve.

Interest Rate Adjustments

Central Bank policy tool used to influence economic activity by raising or lowering interest rates.

Stability in Economic Growth

A condition achieved by controlling money growth, contributing to predictable inflation and encouraging investment.

Historical Inflation Rates in the US

Average inflation was 1.5% from 2008-2018, with significantly higher rates in the 1970s at about 7.8%.

Arbitrary Redistributions of Wealth

Economic phenomenon where unexpected inflation benefits debtors and harms savers as purchasing power