M2. We usually listen to reports that when M1 is greater than M2, how will the national economy be affected, and when M2 is greater than M1, how will the stock market be affected? So, what do these three mysterious numbers M, M1 and M2 represent?

M, M1 and M2 are the categories of money supply. People generally divide the money supply into different levels to measure, analyze and regulate according to the size of liquidity. In practice, the definitions of M, M1 and M2 vary from country to country, but they are all classified according to the size of liquidity. M has the strongest liquidity, followed by M1, and M2 has the worst liquidity.

in modern economy, there is only one bank in each country that can print money, and that is the central bank. The central bank lends the printed money to commercial banks, and commercial banks then lend the money to enterprises or individuals to collect interest. The central bank will withdraw money from commercial banks, burn some cash, and print some new money to maintain the ideal total amount of cash in mind. Most of the loans are paid in large amounts by bills or electronic forms, and there is no corresponding cash. The total amount will be much higher than M, that is, narrow money M1 and broad money M2. For example, checks and demand deposits count as M1, and M2 includes M1, and there is also a big head like institutional deposits.

according to the public information of the national bureau of statistics, China's system is based on M, M1 and M2.

M= cash in circulation;

M1= narrow money supply M+ demand deposits of non-financial companies;

M2= broad money supply M1+ time deposits of non-financial companies+savings deposits+other deposits.

In life, M is closely related to consumption, and its high value proves that people are well-off and well-off, and this possibility is higher when they have no worries about food and clothing. M1 reflects the tightness change of residents' and enterprises' funds, and is the leading indicator of economic cycle fluctuation; The liquidity of M2 is weak, but it reflects the change of total social demand and the pressure of future inflation. The money supply usually refers to M2. There are two channels for putting money in, one is foreign exchange, and the other is through bank credit. The faster their release increases, the greater the growth rate of M2. .....

for reference.