Great question! So, we DID actually subtract the 100 from the currency part of the money supply. But then we added it back to the deposit part, so there is no change in the money supply at first. But then the bank makes a $90 loan, and that goes into the currency because someone now has it as cold. hard cash. Money supply is the sum of currency (which is 90) and deposits (which is 100), so the total money supply is $190. In your question, you are forgetting to add the $100 back into the deposit side, if that makes sense...

You know, I don't think I have it anymore. Sorry 😔

Great question. When I say "increase reserves", I do NOT mean that the bank pulls money out of circulation (from loans, deposits, etc.) to store it in reserves. That WOULD DECREASE the money supply. Instead, what I mean here is that the Fed is paying the banks for the bonds they just bought from the banks. They pay by inserting "printed" money into their reserve accounts. Thus, the banks feel richer, and then in turn make more loans, and increase the monetary supply.

Not a bad question at all! Banks borrow from other banks. Often via third party institutions so they don't know exactly whom they are borrowing from. But for the purpose of understanding, imagine that Chase Bank is borrowing from Wells Fargo bank. As in, the whole big banking company. Or, to make it simpler, you could imagine that each "bank" has only one building...

@@justinjarvis5681 Got it. Thanks so much!

Yes, money market retail funds are included in m2! www.stlouisfed.org/financial-crisis/data/m2-monetary-aggregate

but if we have money market mutual funds as individual and moneny market mutual funds as business which should i choose to calculate m2?

@@sasi-bv4dm I'm not 100 percent sure what you mean but if they are separate accounts they would both be included.

ok thank you alot