M2 is one way to measure the total amount of money in the economy. M0 is all cash money in circulation. M1 is M0 plus all money that can be spent at will, for instance in checking and savings accounts. M2 includes M0 and M1, plus stuff like short term deposits and money market funds.
When M2 shrinks it means there’s less spendable money in the economy, so people spend less. Businesses tend to have to lower their prices to get people to buy. The value of a dollar (or a yen or whatever) goes up, which sounds awesome except for a few huge catches. Now it’s always better to hang on to money rather than exchange it for goods and services. It also weirdly increases the value of debt, so anyone who borrowed anything going into this is screwed. If you’re still reading there’s other stuff that happens like it becomes almost impossible to avoid mass layoffs and monetary policy basically implodes but this shit is boring and I want to go back to getting high and watching the Simpsons
M2 is one way to measure the total amount of money in the economy. M0 is all cash money in circulation. M1 is M0 plus all money that can be spent at will, for instance in checking and savings accounts. M2 includes M0 and M1, plus stuff like short term deposits and money market funds.
When M2 shrinks it means there’s less spendable money in the economy, so people spend less. Businesses tend to have to lower their prices to get people to buy. The value of a dollar (or a yen or whatever) goes up, which sounds awesome except for a few huge catches. Now it’s always better to hang on to money rather than exchange it for goods and services. It also weirdly increases the value of debt, so anyone who borrowed anything going into this is screwed. If you’re still reading there’s other stuff that happens like it becomes almost impossible to avoid mass layoffs and monetary policy basically implodes but this shit is boring and I want to go back to getting high and watching the Simpsons