On the fed discontinued the publication of m3

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On March 23, 2006, the Fed discontinued the publication of M3 statistics. While the measurement of M1, M2 and M3 is fairly technical, it is easy to remember a simplified version: M1 = cash and checks M2 = M1 + personal savings M3 = M2 + institutional savings. M3 M2 M1 A Brief History of Money 30
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Econ 350 U.S. Financial Systems, Markets and Institutions Class 4 One could probably spend a lifetime and still not learn all there is to know about the history of money. I will try to be as brief as possible. Much of this argument comes from Jack Weatherford, A History of Money . While there have been many different types of commodities that have functioned as money over time, we have witnessed an evolution of the payments system throughout history that has enabled us to reduce the transactions costs of exchange. A brief outline may look as follows: BARTER COMMODITY COINS FIAT CHECKS ELECTRONIC MONEY MONEY MONEY Barter We have already discussed barter. Trade may occur, but the transactions costs will be high. Commodity money The origins of commodity money are lost in antiquity. As far back as you go in recorded history, you see some forms of commodity money. Commodity money is an asset that has an intrinsic value apart from its use as money: it is a commodity that has another use. Many items have functioned as commodity money over time. Here is a brief list: Babylon, Assyria – barley India – almonds Greece – iron nails Aztecs – cocoa beans Nicobar Islands – coconuts Yap Islands – large stone wheels Mongolia – bricks of tea Asia – rice, cowrie shells Norway – butter, dried cod Roman Empire, China, North Africa – salt (This is the origin of the word salary .) Siberia – reindeer Borneo – buffalo 31
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Econ 350 U.S. Financial Systems, Markets and Institutions Class 4 Hittites – sheep Europe – cattle (This is the origin of the words capital and chattel .) Russia, North America – furs Ireland – slave girls American colonies – tobacco leaves, maize German Prisoner of War camps in WWII – cigarettes As you can see, many different items have functioned as money over time. Our field trip today will show you some of them. Obviously, some types of commodities make better money than others. Some goods may perish easily, may be difficult to carry around, or may not be suitable for small payments. To function well as commodity money, an item should be: - in limited supply - durable - divisible - have value apart from its use as money, especially if high demand by wealthy - portable - fungible The less that a commodity money met these characteristics, then the higher were the transactions costs of exchange. Agricultural products, for instance, may not be durable or fungible. Large stone wheels are not very portable. Cattle and sheep, or slaves, may run away. Even though many items functioned as commodity money throughout history, over time gold and silver nuggets became the dominant form of commodity money. But gold and silver nuggets were still difficult to weigh and assay (test the purity), so eventually these became gold and silver coins.
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