Money market instruments

Economics Economics Questions
1

Purchasing a money market instrument does not increase or decrease the money supply.

You buying $1000 of a money market instrument merely means that the $1000 was transferred to someone else while you get to hold an instrument for a period.

So why did the Federal Reserve before 1992 target a money supply figure that includes amount of money market instruments?

2

In its essence, money is something which people hold because they know it can be readily used to pay for stuff. A money market instrument is seen as something that does not drop in value and can also be changed into money with extreme rapidity. Viewed like this, it is quite like a bank savings account.