11/8/2025
No wonder the stock market is at an all time high. In the 1970s the media was fixated on Milton Friedman's money supply theories. One does not hear much about it anymore but here is the graph of M 2, Not the big rise during Covid and and even higher rise now!
Before May 2020, M2 consists of M1 plus (1) savings deposits (including
money market deposit accounts); (2) small-denomination time deposits
(time deposits in amounts of less than $100,000) less individual
retirement account (IRA) and Keogh balances at depository institutions;
and (3) balances in retail money market funds (MMFs) less IRA and Keogh
balances at MMFs.
Beginning May 2020, M2 consists of M1 plus (1)
small-denomination time deposits (time deposits in amounts of less than
$100,000) less IRA and Keogh balances at depository institutions; and
(2) balances in retail MMFs less IRA and Keogh balances at MMFs.
Seasonally adjusted M2 is constructed by summing savings deposits
(before May 2020), small-denomination time deposits, and retail MMFs,
each seasonally adjusted separately, and adding this result to
seasonally adjusted M1.
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