Narrow Money

Categories: Econ, Trading

Wasn’t that Nicki Minaj's label before she got her implants?

In financial terms, think of it as money, narrowly defined. Basically, it’s the physical forms of money...the kind you can carry in your pocket. We’re talking bills and coins, as well as a few kind kinds of bank deposits.

It stands opposed to broad money, which includes other items that can feed into a country's money supply. Broad money includes things like funds in bank accounts and other items that people can use to buy stuff.

Related or Semi-related Video

Finance: What is a thin market?13 Views

00:00

Finance allah shmoop what is thin market peahen happens when

00:07

few stocks are trading on bonds to actually thin is

00:12

illiquid thin is when there just aren't a lot of

00:15

buyers at the given price levels Thin is when trading

00:19

volumes are described by the kindly wise cnbc commentators as

00:25

being anemic Thin is when the headlines ask where have

00:29

all the stock buyers gone Long time passing bob dylan

00:34

i'll go ask your parents finn is it Well not

00:37

this guy Fat is high volumes lots of cash being

00:41

put to work Buying securities fat is big demand to

00:44

buy a big supply of supply Fat or liquid markets

00:48

are generally driven by cash being put to work which

00:52

either came from investors who simply saved their pennies to

00:55

then deploy them in the market's taking on more risk

00:58

by being exposed to more volatility and generally speaking hi

01:02

liquidity even in a world where the stock market is

01:05

flat is generally perceived as bullish or positive voting in

01:09

the future of stock market values Yeah so what does

01:11

all that mean Money being put to work is good

01:14

It adds liquidity It means people are hopeful optimistic lots

01:18

Of opinions Then goto work assessing the upside and downside

01:22

of the market such that the gumball estimate effect is

01:25

in place And if you didn't go to third grade

01:27

in the last decade the gumball estimate game revolves around

01:30

the idea that if many opinions estimate the number of

01:33

gumballs in this big fish tank those numbers get averaged

01:36

and way more often than not The average guesses in

01:39

fact very close to the actual number of gumballs crushing

01:43

down on the innocent guppies and other goldfish below The

01:47

same holds true in the stock market where the aggregation

01:49

of many opinions usually makes for better decisions or at

01:53

least more accurate estimates And in the case where a

01:55

market suddenly grows thin it means that a lot of

01:59

educated well heeled invest astors have been spooked by the

02:02

notion of taking on risk in their portfolios by taking

02:05

their safe cash and risking it in the market So

02:09

they d risk or simply then keep cash in their

02:12

wallets Not wanting to put it to work until better 00:02:15.065 --> [endTime] signs come from you know on high

Find other enlightening terms in Shmoop Finance Genius Bar(f)