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M1 is the total estimated amount of specie plus immediately available funds.

M2 is M1 plus time related deposits.

M3 is the total estimated (WAG) amount of a currency in existence in any form.

The CB can interject extra money into the system at each of the 3 levels although the national Treasury and Mint usually have oversight and control of M1.  Whether a CB uses M2 or M3 depends on the policies (goals) and the situational analysis and decision making processes of the various CBs.  

(And you thought I couldn't drag in Epistemology, huh?  :-)  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Jun 25th, 2006 at 01:11:13 PM EST
[ Parent ]
If my way of giving you a loan is to open an account for you with a balance of $100M, doesn't that increase the amount of "currency in existence in any form" without CB involvement?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sun Jun 25th, 2006 at 01:22:51 PM EST
[ Parent ]

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