Follow the money. When the Fed expands M2, asset prices inflate. When it contracts, liquidity dries up and markets struggle. This chart shows you which regime we're in right now.
Total money supply in circulation including cash, checking deposits, and easily convertible near money. Rapid growth can indicate inflationary pressure.
Thresholds (3-month % change): Negative >15% • Warning ≥10% • Positive <10%
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M2 is the Federal Reserve's broadest commonly-used measure of money in the economy. It captures the total amount of money available for spending and investing.
M2 Components:
Growth Rate Signals:
There is a strong historical correlation between M2 growth and equity market performance. When money supply expands, excess liquidity seeks returns in stocks, real estate, and other assets. When it contracts, those same assets face selling pressure.
Expanding M2 (Bullish)
More money chasing the same assets pushes prices higher. The 40% M2 expansion in 2020-2021 fueled one of the fastest equity rallies in history.
Contracting M2 (Bearish)
In 2022-2023, M2 contracted for the first time since the 1930s during quantitative tightening. This coincided with significant equity and bond market drawdowns.
The Fed directly influences M2 through quantitative easing (QE) — buying bonds to inject money — and quantitative tightening (QT) — letting bonds mature to drain money. Interest rate decisions also affect money creation through bank lending. Understanding the Fed's current stance is essential for anticipating money supply trends and their market impact.
US Dollar Index (DXY)
Dollar strength — the other side of the monetary coin
Real Interest Rates
Inflation-adjusted rates driving real borrowing costs
Recession Probability
Combined recession forecast for 2026
Buffett Indicator
Market cap to GDP — valuation in a liquidity-driven market
Market Growth Indicators
All 3 growth signals on one dashboard
Economic Indicators Guide
Complete guide to every metric we track
Money supply data sourced from the Federal Reserve. For educational purposes only. Not investment advice.