Can anyone refer me to the paper defining TMS?
I have searched the site and I must be just flat out missing it.
Best Regards,
Bruce
i can't find the paper where Rothbard defined it (if i recall correctly he was the one that coined the term) but here's some stuff by Salerno and Shostak on it.
You'd probably have better luck searching for 'Austrian money supply'.
Here's a thread detailing what you need to construct a close appromixation.
A recent book I read called Gold:The once and future money generalized the money supply (for the purposes of evaluating whether we are INflating or DEflating) into largely two components. The first was the 'base' money created by the FED/Treasury and the second as a result of credit creation in the fractional reserve banking system ... whose contribution is a function of money banks are 'willing ' to lend and the 'uptake' by borrowers.
A key point about the credit component is that the Fed cannot 'control' this significantly when bankers are retrenching and borrowers don't see a business environment with opportunities to employ capital.
MZM, from my reading, doesn't appear to include the credit portion of the money supply. Is there a honest and reliable measure of this credit component that I am not seeing?
I have visited the Mises site on and off for several years. Now with the economic crisis upon us, the little I have read here makes me want to learn more. Much of the logic I read is an oasis in the BS desert of the media.
Any other comments would be appreciated!
The "base money" supply should closely resemble the size of assets/liabilities on the balance sheet of the FED. This should be physical currency plus reserve accounts at the FED. (Note - the market value of the FED's gold holdings are actually about 20 times larger than the price they list it at on their balance sheet)
M1 is currency plus checking deposits. M2 is M1 plus savings and small time deposits I believe. M2 Minus is M2 minus the time deposit component. MZM is M2 Minus plus money market funds.
MZM and True Money Supply, from what I understand, seem to represent the same thing - all accounts that can be redeemed for physical currency on demand without a fee. I will be reading the above articles to find out more...
The point here is that everything above the "base money" is bank credit. Checking/savings deposits can result from prior bank loans of prior deposits. Some forms of credit cannot be considered an expansion of the money supply, however. For example, time deposits, especially long time deposits, do not expand the money supply because they cannot be redeemed for physical currency until their maturity date.
Check my blog, if you're a loser
from http://mises.org/content/nofed/chart.aspx?series=TMS
"The TMS consists of the following: Currency Component of M1, Total Checkable Deposits, Savings Deposits, U.S. Government Demand Deposits and Note Balances, Demand Deposits Due to Foreign Commercial Banks, and Demand Deposits Due to Foreign Official Institutions."
Does TMS not include money market funds? EDIT: This is answered in the above papers. Money market demand accounts are, but not money market mutual funds. Check the right column of page 3 on the Salerno paper.