M2 is the widest ordinary measure of how much spendable money exists: notes and coins, current accounts, savings deposits and the near-money that sits beside them. It is the number every liquidity argument eventually rests on.

Setting it beside Bitcoin, equities and gold turns a slogan into something checkable. If hard assets really do track money creation, the lines should say so, and where they part company is as informative as where they agree.

What it actually measures

The money stock grows almost all the time. Central banks target modest growth and banks create deposits when they lend, so an upward line is the ordinary condition rather than news.

What varies is the pace. A few per cent a year is unremarkable; the double-digit stretch that followed the pandemic response was not, and the assets on this chart moved accordingly.

Outright contraction is the rare state. It requires deposits to shrink faster than new lending creates them, which happens when banks pull back and savers move money out of the system at the same time.

The comparison is a test, not an illustration

Plotting three assets against money creation looks like decoration and is actually the argument being examined. Each of the three is claimed at some point to be a hedge against money printing, and the chart is where that claim meets its evidence.

The results are uneven, which is the honest outcome. Long stretches show a clear relationship and other stretches show none at all, and a reader who only ever sees the first kind is being sold something.

M2 Momentum: turning early is the same thing as being early to be wrong

Acceleration and deceleration are the two states worth naming. Money creation running faster than it was is a different environment from money creation running slower, even when both are positive and the stock is climbing in either case.

This view leads the level by construction, and that is genuinely useful. Seeing the pace roll over before the stock does gives a longer runway than watching the stock alone.

The cost of that lead is a worse hit rate. A deceleration that reverses within two quarters looked identical at the time to one that ran for two years, and nothing on the chart separated them until afterwards. Being early and being wrong produce the same reading.

What it does not tell you

Money supply is a stock, not a flow of demand. New deposits can sit unspent, and money that never moves changes nothing about the price of anything.

The relationship is slow and loose. Money creation shows up in asset prices over quarters when it shows up at all, which makes this useless for anything resembling timing.

Definitions differ between countries and get revised. A global aggregate is a stitched-together thing, and its level carries less meaning than its direction.

How to read it

Rapid expansion. Money is being created quickly, which has historically favoured assets priced in it.

Steady expansion. The usual condition: a few per cent of growth a year.

Subdued growth. Growth has slowed to the point where it offers little help.

Contraction. The stock is shrinking, a genuinely uncommon reading and a real headwind.

The Macro dashboard draws M2 Money Supply alongside M2 Momentum, Net Liquidity and M2 Liquidity Engine.

Common questions

What does M2 count?

Money that can be spent or turned into spending quickly: cash, current accounts, savings balances and the deposits that sit alongside them. It is the standard stand-in for how much purchasing power exists.

Why are three assets on the same chart?

Because each of them is claimed to protect against money creation, and putting all three beside the source lets that claim be examined rather than repeated.

Why does contraction stand out?

Because it hardly ever happens. Deposits shrinking outright means lending has stalled while savers are pulling money out, and both of those conditions together mark real stress.

Does more money mean higher prices?

Not dependably, and not on any schedule. New money can sit idle for years, and the link to asset prices has been strong in some periods and absent in others.

Should the global or the domestic figure be read?

The global aggregate captures more of the world’s liquidity, and the domestic one is cleaner data with a direct line to the dollar. They usually agree, and when they do not, that gap is itself worth noticing.

Why read pace instead of level?

Because the level rises in almost every year and therefore says little on its own. Changes of regime appear in the pace, which is where a reader can actually see one happening rather than infer it later.

How much weight should this carry?

Some, and never the whole argument. It describes one input to markets and has been overruled by policy surprises and outside shocks more than once.