Understanding M1 and M2: Simple Explanation and the Government’s Role in Causing Inflation.

Understanding M1 and M2: Simple Explanation and the Government’s Role in Causing Inflation. Hey everyone! In my latest video, I explained what M1 and M2 are, how they relate to inflation, and how the government influences them. Let's break it down simply:

M1: This is the money you can use right away. It includes cash, coins, and money in your checking account.

M2: This includes everything in M1, plus savings accounts, CDs, and money market accounts.

Why does this matter? The government plays a huge role in increasing the money supply through policies and actions like printing more money and adjusting interest rates. As the money supply (M1 and M2) increases, it can lead to higher inflation, which affects everything from car loans to mortgage rates. Understanding this helps us grasp why prices are rising. Check out the full video for more details and feel free to leave your questions in the comments!