The chart shows that the U.S. money supply M2 reached an all-time high of $21.9 trillion in May 2025, representing an annual growth rate of 4.5% and a compound annual growth rate (CAGR) of 4.3% from 2000 to 2025. M2 includes cash, checking deposits, savings accounts, and other liquid assets. Significant growth spurts are evident following the 2008 global financial crisis and the 2020 COVID-19 pandemic, with the latter resulting in sharp increases due to expansionary monetary policy.
Data from the Federal Reserve shows 19 consecutive months of growth, surpassing the previous peak of $21.86 trillion reached in March 2022. Adjusted for inflation, the M2 aggregate grew 2.1% year-on-year, the highest since early 2022. Analysis: Monetary expansion trends: The robust 4.5% year-on-year growth suggests ongoing liquidity injection, likely through Federal Reserve measures such as low interest rates or quantitative easing. This is consistent with historical patterns of M2 surges following economic crises, indicating a proactive response to stimulate the economy.
Inflationary implications: Real M2 growth of 2.1%, ahead of recent inflation trends, could signal potential inflationary pressures. Excess liquidity often leads to increased spending, pushing prices higher unless offset by tighter policy.
Impact on assets: M2 growth historically correlates with bullish trends in risk assets. The current expansion, coupled with 45% growth ($7 trillion) since 2020, could result in capital being redirected to alternative investments. The #bitcoin and #Cryptocurrency markets could see increased interest as a hedge against inflation.
Long-term context: With an average annual growth rate of 4.3% over 25 years, the pace of money supply growth has accelerated since 2020 (an average annual growth rate of 7.9% from 2020 to 2024 according to some analyses), reflecting aggressive monetary policy. This could support asset price growth if liquidity is maintained.
ConclusionsThe record level of M2 money supply at $21.9 trillion indicates a robust liquidity environment that could support inflation and asset price growth.
Investors may increasingly turn to cryptocurrency and bitcoin as stores of value amid concerns about currency devaluation.
The 19-month growth streak and post-2020 surge point to a prolonged growth phase for risk assets, although future Fed actions (such as rate hikes) could change this trajectory.
Monitoring the inflation-adjusted M2 money supply and Fed policy will be critical to assessing the sustainability of this trend.
This analysis reflects current data and sentiment, as well as the potential for growth in popularity of #altcoins and #blockchain as the monetary environment evolves.$$BTC $$ETH $SOL
