Money supply

Money supply is simply the amount of money available in the economy. There are several ways of measuring the various sorts of money, depending on how wide you make the definition.

In the UK, M0 – also called narrow money – includes only the most liquid types of money: cash, cash in bank tills, and deposits held at the Bank of England. M4 (M3 in the US) consists of cash, current-account deposits at banks and other financial institutions, and savings deposits.

Central banks keep a close eye on the money supply in the belief that it affects prices. If the amount of money in circulation rises, and the number of goods produced does not, then prices rise. This is called demand ‘pull inflation’, which in turn leads to commodity price rises that push other prices higher and creates ‘push inflation’.

MoneyWeek magazine

Latest issue:

Magazine cover
Don't panic!

The Greek vote is a great opportunity to buy Europe

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Paul Hodges: house prices could fall 50% in 'Great Unwinding'

Merryn Somerset Webb interviews Paul Hodges about deflation, the global economy's 'Great Unwinding', and how Britain's house prices could halve.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


30 January 1933: Adolf Hitler takes power

Adolf Hitler came to power on this day in 1933 following a political gamble that went disastrously wrong, and allowed the Nazi leader to call fresh elections.