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Money Supply Calculator (M1, M2, M3)

Compute narrow and broad money aggregates (M1, M2, M3) to analyze economic liquidity. Determine the classification of assets based on their conversion speed.

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M1 (Narrow Money)
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M2 (Broad Money)
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M3 (Total Liquidity)
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About

Money supply metrics are categorized by liquidity: how quickly an asset can be used for transactions without losing value. Central banks categorize these into tiers: M1, M2, and M3. Accurately calculating these aggregates is essential for forecasting inflation, interest rates, and overall economic activity.

M1 represents the narrowest definition (coins, notes, demand deposits), focusing on immediate spending power. M2 adds "near money" like savings accounts and money market funds, which are less liquid but convertible. M3 (no longer tracked by the US Fed but used by the ECB) includes large time deposits and institutional funds, providing the broadest view of capital availability.

M1 M2 M3 money supply inflation economics

Formulas

The aggregates are nested, meaning each level includes the previous one:

M1 = Cash + Demand Deposits
M2 = M1 + Savings + Retail MM Funds + Small CDs
M3 = M2 + Large CDs + Institutional MM Funds + Repos

Reference Data

AggregateIncludesLiquidity LevelEconomic Use
M1Currency + Demand Deposits + Traveler's ChecksHighest (Immediate)Spending analysis, short-term liquidity.
M2M1 + Savings + MM Securities + Small Time Deposits (CDs)HighPredicting inflation, economic growth (GDP).
M3M2 + Large Time Deposits + Institutional MM FundsModerateLong-term bank funding analysis.

Frequently Asked Questions

The US Federal Reserve ceased publishing M3 data in 2006. They stated that M3 did not convey any additional information about economic activity that wasn't already captured by M2, and the cost of collecting the data outweighed the benefits.
No. Credit cards represent a line of credit (a potential liability), not an existing asset. Using a credit card is borrowing money, not spending money you already possess. The payment of the credit card bill involves M1.
Near money refers to assets that are highly liquid but not cash itself, such as savings accounts or certificates of deposit (CDs). They cannot be used directly for transactions (you can't buy coffee with a CD) but can be converted to cash quickly.