While policymakers focus on inflation reports, some economists warn the real danger is the exploding M2 money supply. The problem is not just that M2 is high. It’s how we got here and what that means going forward.

In August 2025, America’s M2 money supply hit a record $22.2 trillion. That is the highest level ever recorded. M2 is the broadest common measure of money in the U.S. economy. It includes cash, deposits, and short-term investments. In plain terms, it’s the best snapshot of how much money is sloshing around in the system. And because the U.S. dollar serves as the world’s main reserve and settlement currency, America’s money supply also influences the global economy.

From Pandemic Printing to Endless Expansion

During the pandemic, the Federal Reserve and the federal government unleashed a flood of money to prop up the economy. Between 2020 and 2022, the Fed’s easy-money policies added about $6.4 trillion to the system. In total, roughly 26 percent of all dollars now in existence have been created since early 2020. Nearly two-thirds of today’s entire money supply has been created in just the past thirteen years. The M2 has now risen for 18 months in a row, the fastest pace since mid-2022. ¹

Globally, the total M2 money supply has climbed near $140 trillion, up $8 trillion in only six months. That’s a huge wave of liquidity chasing too few productive investments.²

Why Too Much Money Is Dangerous

When the money supply grows faster than the real economy, it doesn’t create more goods or services, it just drives prices and asset values higher. This is how inflation, speculation, and financial bubbles take root.

High M2 levels can fuel several kinds of risk:

Persistent inflation. If money expands faster than economic output, inflation pressures can stick around even when official price numbers seem tame. Rising government debt and spending only add fuel.

Asset bubbles. Extra liquidity often flows into stocks, real estate, and other assets. Prices rise not because companies earn more, but because investors have more money to throw around. The S&P 500’s price-to-earnings ratio now sits close to where it was before the dot-com bubble burst in 1999.

Slower growth. When the government borrows and spends a lot, it takes money away from businesses that could use it to grow and create jobs. This can slow the economy, even when there’s plenty of money in the system.

Systemic risk. Much of this money sits in large money-market funds controlled by a few major institutions. If these players suddenly change course, markets can swing wildly.

The Stock Market’s Sugar High

Banks operate under a fractional reserve system, which means they can lend out many times more than they hold in deposits. Every new loan expands M2. When the Fed injects liquidity or cuts rates, that extra money often flows straight into stocks and real estate.

That’s one reason the stock market is hitting record highs. Investors have more cash than they know what to do with, so they buy up shares and drives prices higher. When stock prices rise faster than company profits, like what we see today, it shows that the boom is being driven by money, not real growth.

This is how bubbles form. When sentiment changes or policy tightens, inflated markets can drop fast. And because so much wealth today is tied to financial assets, even a small correction could shake consumer confidence and spending.

Too Much Money, Too Little Growth

M2 growth no longer translates into real economic strength. Money velocity, the speed at which money circulates, keeps collapsing. New money is sitting idle in bank accounts or chasing speculative investments. Globally, central banks are responding to rising debt by creating more money rather than addressing structural problems, a recipe for instability and inflation.

This breakdown between liquidity creation and real output shows that the old playbook of printing money to spark growth may not work anymore. Instead, it weakens the currency and builds up long-term inflation pressure.

Ironically, some economists point out that while the amount of money is at record levels, the rate of M2 growth is now too low to keep the economy strong. At 4.8 percent a year, it’s below the “Golden Growth Rate” of about 6.3 percent. ³

Either way, the message is grim. The United States now faces the worst of both worlds: a massive pile of money already in circulation, but a slowing rate of new growth. There’s plenty of cash out there, yet not enough productive activity to make it useful. That combination can squeeze credit, dampen investment, and still leave inflation simmering in parts of the economy.

Signs of Strain

The broader data show that money alone cannot hide growing economic stress. Job growth has slowed. The New York Federal Reserve reports that delinquencies on student loans, auto loans, and credit cards are at or above levels seen during the Great Recession. Bankruptcies are up more than 11 percent this year. Pending home sales keep falling.

Instead of supporting productivity, money is floating in the financial system, propping up valuations and government spending while ordinary households face rising costs and stagnant wages.

Conclusion

Printing money can feel painless at first. It keeps markets happy and debt service cheap. But it also undermines the foundation of a healthy economy: real productivity, sound credit, and faith in the currency itself.

History shows that once too much money enters the system, getting it back under control is painful. If policymakers ignore the warning signs, today’s record money supply could become tomorrow’s financial crisis.

As confidence in fiat currencies declines, more people are turning to time-tested stores of value like physical gold. By holding precious metals in a Gold IRA, Americans can help secure their long-term financial future against the impact of an engorged money supply. To learn more about protecting your wealth with a Gold IRA, contact American Hartford Gold today at 800-462-0071.
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Max Baecker is the President of American Hartford Gold (AHG), the nation’s largest retailer of precious metals. He leads American Hartford Gold’s mission to help clients achieve long-term financial security with physical gold and silver.

Under his guidance, American Hartford Gold has delivered billions of dollars’ worth of precious metals to thousands of satisfied clients.

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Notes:

1. https://mises.org/mises-wire/money-supply-flatlines-employment-cools-and-delinquencies-rise

2. https://x.com/KobeissiLetter/status/1971301428615614546

3. https://thetradable.com/global-economy/us-money-supply-growth-falls-below-golden-rate-ig--a