Money Supply Trends Suggest Stability Rather Than US dollar Debasement

Supporting the US dollar-debasement narrative is the claim that money supply growth is out of control. For instance, we saw a post claiming “US money creation is happening at an alarming pace.” Specifically, he says the money supply increased by $1.65 trillion in 2025. Quoting the money supply, as he does, in absolute dollar terms is meaningless.

To properly gauge money supply growth, one should compare the rate of change in the money supply compared to the economy’s growth rate (GDP). As shown below, M2 grew by 4.27% year over year. Nominal GDP grew by 5.71%. In other words, the money supply grew more slowly than the economy. Furthermore, money supply growth is slightly below the pre-pandemic average, despite a recent uptick in economic growth.

If money grows in line with the economy’s productive capacity, it helps maintain price stability by aligning the money supply with the quantity of goods and services produced and demanded. When money grows faster than real output, inflation occurs. Conversely,  when the money supply grows more slowly than GDP, liquidity shortages can constrain growth and increase the risk of deflation.

Simply put, aligning money supply growth with economic growth supports stable prices, efficient capital allocation, and sustainable long-term expansion. If anything, the fact that money is not growing as fast as the economy should raise disinflationary flags, not “alarming” concern.

The Week Ahead

The highlight of the holiday-shortened week will be Thursday’s PCE prices data. Given the recent positive inflation data from the BLS, investors will look for confirmation in PCE. Bear in mind that the Fed relies most heavily on PCE prices, not CPI. The consensus estimate has Core PCE at +0.4% monthly and 2.9% annually. This would indicate slightly higher inflation than the CPI.

The Fed will be in its media blackout period this week as they approach next week’s FOMC meeting. As we share below, the odds of a rate cut at this meeting are a mere 5%.

The pace of earnings announcements will increase this week.

• Tuesday: Netflix (NASDAQ:NFLX), 3M Company (NYSE:MMM), and United Airlines (NASDAQ:UAL)
• Wednesday: Johnson & Johnson (NYSE:JNJ), Charles Schwab (NYSE:SCHW), Kinder Morgan (NYSE:KMI)
• Thursday: Visa (NYSE:V), Procter & Gamble (NYSE:PG), Abbott Laboratories (NYSE:ABT), Intel (NASDAQ:INTC), and Southwest Airlines (NYSE:LUV)
• Friday: Nextera Energy (NYSE:NEE), Schlumberger (NYSE:SLB)

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