What Is Money?

VIDEO UPDATE: Since May of 2020, M1 also includes savings deposits.

That may seem like a really simple question, but it’s actually kind of complicated. Paper bills and coins, or currency, is obviously money. But it doesn’t end there.

Technically, “money” is anything that is a widely accepted means of payment. This has changed throughout history. Once upon a time, cattle could be considered money. Or cowry shells. Today, cryptocurrencies like Bitcoin are being added to the mix.

Given that there’s no set definition for what makes a commodity money, there are a few measurements for the U.S. money supplies. The first, MB (or “monetary base”) measures currency and reserve deposits. This is what the Fed has the most direct control over.

Our next stop will be fractional reserve banking and the money multiplier.

[MarginalRevolutionUniversity]

VIDEO UPDATE: Since May of 2020, M1 also includes savings deposits.

[jvb]

Your graphics are getting better, Marginal Revolution University - I look forward to seeing further improvements. Keep it up!

[gonzaloMR]

So the monetary base can be defined as M0 + the reserve deposits of commercial banks at the central bank? Thanks!

[guruprasadhneelakandan]

Can you please do a video about cryptocurrency?

[kenwiley]

Credit Issuer's Sometime Have Middleman Markets Before Debt Security is Purchased by Credit Issuer's

[kenwiley]

Before Bank Accounts Bookeepers Record Keepers Physically Wrote Credit Rather than Keystroke via Electronic Infrastructure

[tylerleemyles]

are coupons and gift cards considered money?

[simonsarevski]

Alex man, throw that tie in the trashcan pls :) cool video btw

[ivanbreak]

Now can you explain why construction worker is payed low and basketball player high ?

[Mujangga]

All I have is a Savings Account and I can buy things from it using a debit card.

[easylearningwithbaba]

and what about credit cards? are they money?

[uawsux]

Great video for a 14 year old but a sixteen-year-old wouldn't buy it

[Pirtti]

It didn’t fundamentally answer the question.

[Jesse-zplh]

This is mostly wrong, or at the very least misleading, and the next video covering the money multiplier even more so. Sad that this information is shared by reputable economists as true. Authors, please see “Money creation in the modern economy“ by the Bank of England, and revise or delete these videos.

[bradenalexandertoomey]

Money is by far nothing you've stated though. True Money must have intrinsic value. So actually, jewelry is closer to being money than cash. I'm disappointed in this video for defining currency as money.