[JasonC]

When you sell a stock and get a bigger bank balance the money that is newly yours is indeed part of the money supply. But it was the instant before the transaction too, it just wasn't yours. There is a buyer for every seller, in all trade in existing securities. Even if a company is issuing new stock, money is just moving from your account to the companies account, as stock moves in the opposite direction. And similarly, the other way, if a company buys stock back from you.

The illusion is you think a change in *your* holdings of money, are a change in the amount of money there is. Not so.

Money is the debt of a bank. The money supply increases when banks run up the size of their balance sheets, both the liabilities side (their debts, which are money) and their asset side (their loans and other claims on the rest of us).

[groanup]

The illusion is you think a change in *your* holdings of money, are a change in the amount of money there is. Not so.

You're off topic. Tell us how a change in M1 can change the money stock.

[nicola_tesla]

“Money is the debt of a bank.”

And there it is in a nutshell. Debt is money.

Which, of course, is why some say the Fed “controls” it - the Fed controls the reserve requirements and the target FFR. They do not have any finer control than that.

More strictly speaking, the Fed has a large “influence” on the money supply.

[Toddsterpatriot]

When you sell a stock and get a bigger bank balance the money that is newly yours is indeed part of the money supply. But it was the instant before the transaction too, it just wasn't yours.

I agree. My original claim was about a maturing CD. According to this, MZM is "M2 less small-denomination time deposits plus institutional money funds". When my CD matures, it is still part of M2 but no longer subtracted out.