M1 is the narrowest measure of the money supply tracked by the Federal Reserve, and it consists of the most liquid forms of money: physical currency, demand deposits (checking accounts), and other liquid deposits like savings accounts and money market deposit accounts. If you can spend it or convert it to spendable cash almost instantly, it probably falls under M1.
The term “M1” also has distinct meanings in neuroscience, immunology, and pharmacology. This article covers all of them, starting with the economics definition most people are searching for.
M1 Money Supply: The Three Components
The Federal Reserve defines M1 as three categories of liquid money held by the public.
- Currency in circulation. This includes all Federal Reserve notes (paper bills) and coins that are outside the U.S. Treasury, Federal Reserve Banks, and the vaults of banks and credit unions. Money sitting in a bank vault doesn’t count. Money in your wallet does.
- Demand deposits. These are balances in standard checking accounts at commercial banks. The definition excludes amounts held by other banks, the U.S. government, and foreign banks or official institutions. It also subtracts “cash items in the process of collection,” which are checks that have been deposited but haven’t cleared yet.
- Other liquid deposits. This is the broadest bucket, and it includes several subtypes: negotiable order of withdrawal (NOW) accounts, automatic transfer service (ATS) accounts at banks, share draft accounts at credit unions, demand deposits at thrift institutions, and savings deposits including money market deposit accounts.
The inclusion of savings deposits in M1 is relatively recent. Before May 2020, savings accounts were counted in M2 but not M1, because federal rules limited savings withdrawals to six per month. When the Fed lifted that restriction during the pandemic, savings deposits moved into M1, causing the reported M1 figure to jump dramatically. That shift was a definitional change, not an actual surge in the money supply.
How M1 Differs From M2
M2 includes everything in M1 plus less liquid assets: small time deposits (like certificates of deposit under $100,000) and retail money market mutual funds. The key distinction is speed of access. M1 money can be spent or withdrawn with no waiting period and no penalty. M2 adds money that takes a small extra step or time delay to convert into something you can spend directly.
Economists watch M1 to gauge how much ready-to-spend money is circulating in the economy. A rapidly growing M1 can signal inflationary pressure, while a shrinking M1 may reflect tightening financial conditions.
M1 in Neuroscience: The Primary Motor Cortex
In brain anatomy, M1 refers to the primary motor cortex, a strip of tissue on the precentral gyrus that controls voluntary movement. It corresponds to Brodmann area 4 and is classified as “agranular cortex” because it lacks a prominent layer of small, densely packed neurons that other brain regions have.
What makes M1 structurally unique is the presence of Betz cells in its deepest pyramidal layer (layer V). These are the largest neurons in the human central nervous system, with cell bodies measuring roughly 60 by 120 micrometers and axons that can stretch over a meter to reach the spinal cord. Despite their fame, Betz cells are rare. They make up only about 10% of the pyramidal neurons in layer V and roughly 2% to 3% of all neurons projecting down the corticospinal tract. Their dendrites branch out around the full circumference of the cell body, an unusual pattern that distinguishes them from typical pyramidal neurons.
M1 is organized as a body map, sometimes called the motor homunculus. Different strips of cortex control different body parts, arranged from the top of the brain (legs and feet) down to the side (face and tongue). The hand and fingers get a disproportionately large territory: finger representations shift gradually from the thumb at a lower, more lateral position to the little finger at a higher, more medial position. About 37% of the corticospinal tract fibers originate from M1, making it the single largest contributor to the pathway that carries movement commands from the brain to the spinal cord.
M1 in Immunology: Pro-Inflammatory Macrophages
Macrophages are immune cells that can shift between different functional states. The M1 state, sometimes called “classically activated,” is the pro-inflammatory mode. M1 macrophages are triggered by bacterial products or immune signaling molecules like interferon-gamma, and they specialize in killing pathogens and sounding the alarm for the rest of the immune system.
M1 macrophages produce a cocktail of inflammatory signals including TNF-alpha, IL-1, IL-6, IL-12, and IL-23. They also generate nitric oxide and reactive oxygen species, which are toxic to invading microbes. On their surface, M1 macrophages display high levels of the proteins CD80 and CD86, which help activate T cells. They show low levels of the mannose receptor CD206, which is more characteristic of the anti-inflammatory M2 state.
The tradeoff is tissue damage. The same signals that kill bacteria also harm surrounding healthy cells. M2 macrophages do the opposite: they quiet inflammation and promote tissue repair. The balance between M1 and M2 activity plays a role in conditions ranging from chronic wounds to autoimmune disease to cancer.
M1 in Pharmacology: Muscarinic Receptors
M1 also refers to the M1 muscarinic acetylcholine receptor, one of five muscarinic receptor subtypes (M1 through M5). This receptor responds to acetylcholine, a chemical messenger involved in memory, learning, and attention. M1 receptors are found primarily in the brain, particularly in regions involved in cognition.
When acetylcholine binds to an M1 receptor, it activates a signaling protein called Gq/11, which triggers a chain reaction that increases calcium levels inside the cell. This is different from M2 and M4 receptors, which connect to a separate signaling family (Gi/o) and generally slow cellular activity rather than ramp it up. Because M1 receptors are concentrated in the brain and involved in cognitive function, they are a target of interest for conditions like Alzheimer’s disease, where acetylcholine signaling declines.