this is a short economic critic on Scottishfold's view on china's 150T M2 supply.
1. M0 = this is bank notes. i.e. currency in circulation.
2. M1 = M0 + Checking account.
3. M2 = M1 + Saving account.

now, please note, M1 means non-interest bearing money. i.e Money which can be withdraw and in circulation almost immediately. they do not accumulate any interest. therefore, in economy, this means the spending power of economy. ie. Demand of society in theory.
M2, it includes the Saving account. The saving account means it can be withdrawn and goes into circulation almost immediately and it also bears interest. What does interest mean? it means the banking system has the incentive to invest these savings back into industry to make profits. Otherwise, banks will not be able to pay for those interests.

Therefore, a direct interpretation of M2 increase is that more capital is available to be invested into industry. i.e, without considering the change of M1 and other factors, M2 increase means more investment and economy expanding.

my critic concludes.





haojiang.murex 发表于 6/3/2016 5:38:29 PM [url=http://forums.huaren.us/showtopic.aspx?topicid=2022917&postid=71846804#71846804]

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