To: Elroy Jetson who wrote (16381 ) 11/20/2004 3:21:30 AM From: mishedlo Read Replies (1) | Respond to I beg to differ.Observe that MZM includes assets that can be converted into money. This is precisely what is wrong with this definition, since it doesn't identify money but rather various assets that can be easily converted into money. In short, it doesn't tell us what money actually is and where money is located, which is what a definition of money is supposed to do. This must be contrasted with the Austrian School of Economics Money Supply definition (money AMS) that aims at identifying what money is and where it is located in an economy.[2] In contrast to MZM money, the AMS definition doesn't deal with assets that can be converted into money but rather with money. The AMS definition only counts the amount of money and doesn't include various forms of investments, which are in fact credit type transactions. (Credit transactions emerge when Joe lends his $1,000 to Bob, i.e., he temporarily transfers the ownership of the money. Also, when Tom invests his $1,000 he is engaging in a credit transaction since he transfers the ownership of the $1,000 to the issuer of a financial paper).Since the money AMS definition deals only with money it does a much better job in the assessment of the likely direction of economic activity and financial markets than various popular definitions of money will do. Take for instance the period 1991–92. During this period the Dow Jones Industrial Average increased by 11.3% in 1991 and 11.2% in 1992. This increase could not be explained by M2 and M3 definitions. From a rate of growth of 5.5% in 1990 the money M2 rate of growth fell to 3.7% in 1991 and 1.9% in 1992. There is, however, no problem with money AMS. After growing by 3.1% in 1990 this monetary measure grew by 6.3% in 1991 and 11.6% in 1992. Message 20782032
