U.S. Money Supply Growth Hits 59-Month High in July
nashnova research
U.S. money supply grew 8.62% year-on-year in July — the fastest pace in nearly five years — pushing the total past $19.71 trillion; the acceleration comes amid a weakening economy and core inflation stuck above target for 65 straight months, testing the Fed's credibility.
How much new money, and how fast?
The TMS money supply — an Austrian-school measure of "true money" — rose 8.62% year-on-year in July, up from just 1.46% a year earlier. That is roughly a sixfold acceleration in 12 months.
The total climbed above $19.71 trillion, a net increase of about $1.5 trillion over the past year. This means → on average, more than $120 billion of new money entered the system every month.
Broad M2 hit a record too: $23.1 trillion in July, with year-on-year growth of 5.42% — a 49-month high.
The economy is slowing — why is money still expanding?
Q2 2026 GDP growth slowed to just 1.5%; payrolls have shrunk by over 1.2 million since late 2025; real wages have been negative since March.
In plain terms = when an economy cools, businesses and consumers borrow less, banks lend less, and the money supply should contract. This time it did not.
Analysts point to the Fed: to hold down Treasury yields and support asset prices, it expanded its portfolio by $124 billion over the past year, buying Treasuries with newly created money. This means → the central bank's bond purchases offset the monetary contraction that a slowing economy would normally produce.
Will all this extra money push prices higher?
The Fed's preferred inflation gauge — core PCE, which strips out food and energy — rose 3.7% year-on-year in July and has exceeded the 2% target for 65 consecutive months.
New Fed Chair Kevin Warsh publicly acknowledged the five-year miss and pledged to bring inflation down.
In plain terms = faster money-supply growth does not translate one-for-one into higher prices overnight, but sustained monetary expansion is widely viewed as a leading signal of medium-term inflation pressure. Pledging to fight inflation while continuing to expand the money supply is the contradiction markets will keep questioning.
Where did all this money come from historically?
Since late 2009, the TMS money supply has grown more than 226%; M2 has grown more than 170%.
Roughly 30% of the current money stock was created after January 2020; nearly 70% was created after the 2008 financial crisis.
This reflects a structural shift: two mega-crises — 2008 and 2020 — permanently reset America's monetary base. Today's expansion is compounding on top of an already massively inflated foundation.
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