Base money - Definition and Overview

The money base, or the monetary base is a government liability, currency and bank reserves.

Arguments and criticism

It's by some means the amount of (internationally-recognisable) reserves securing the money supply at a given moment of time. In retrospective, gold was used to determine the money base.

Since the second half of eighties the notion of amorphous "reserves" underlying the money base was consistently presented as an axiom-type statement, which, however contradicts the actual incidents underlying the separation of current monetary system from gold.

Many economists fear that money base is increasingly diluted, thus the quantifieable "reserves" in the world monetary system today are in essence amount of (mostly) unsecured debt.

Please refer to economic discussions relating to gold standard and the system of world currencies for further information about money base - dependencies/trends

See also

• Money supply

External links

Definition

• AmosWEB: GLOSS*arama: MONETARY BASE (http://www.amosweb.com/cgi-bin/gls.pl?fcd=dsp&key=monetary+base)

Data

• Aggregate Reserves Of Depository Institutions And The Monetary Base (H.3) (http://www.federalreserve.gov/releases/h3/Current/h3.htm)

Articles

• Why the Federal Reserve is Irrelevant By John P. Hussman, Ph.D. August 2001 (http://www.hussmanfunds.com/html/fedirrel.htm)