M0 M1 M2 M3.
The money supply tiers.

Why tiers exist

Not all money is the same kind of money. A dollar bill in your wallet behaves differently from a dollar in a money market fund. A bank reserve at the Federal Reserve is different from a balance in your checking account. The Fed tracks these distinctions because each tier responds differently to policy and affects inflation differently.

The definitions separate reserve creation from deposit money and from spending. The accounting gives you no fixed lag, so compare credit, spending, prices and output on clearly stated dates.^[1][2]

M0: the monetary base

What it contains: physical currency in circulation plus bank reserves held at the Federal Reserve. Both are direct liabilities of the Fed. Also called base money or high-powered money.

As of May 2026: approximately $5.5 trillion verify×DON'T TRUST, VERIFYClaim: US monetary base (M0) is approximately $5.5 trillion as of May 2026.Verify at: Federal Reserve H.3 release ↗ Source 1 in the list belowThe H.3 release ended in September 2020; its monetary base data now appear in the H.6 release..

Why "high-powered"

Reserve balances settle payments between banks. A bank writes a loan and the matching deposit into existence without first receiving a multiplied increment of reserves. It still has to fund the payments that follow and meet capital and liquidity rules. Abundant reserves do not create profitable loans or willing borrowers.^[1][3]

The Fed directly controls M0. It does not directly control M1 or M2; those expand through bank-lending decisions in response to demand and rates.

Bitcoin as M0

Bitcoin held in self-custody behaves like M0. You hold the base asset directly. No bank can create additional Bitcoin against your holdings. There is no Bitcoin equivalent of M1, M2, or M3 in the base protocol. Exchange-held Bitcoin is more like an M1-equivalent claim on a custodian. Detail at How Money Works.

M1: money you can spend today

What it contains: M1 includes currency held outside the Treasury, Federal Reserve Banks and depository-institution vaults, demand deposits and other liquid deposits (including savings deposits since May 2020), subject to H.6 exclusions. Reserve balances are not part of M1.^[2]

As of May 2026: approximately $19.8 trillion verify×DON'T TRUST, VERIFYClaim: US M1 is approximately $19.8 trillion as of May 2026.Verify at: Federal Reserve H.6 release ↗ · FRED M1SL ↗ Source 2 in the list belowThe Fed redefined M1 in May 2020 to include savings deposits, which roughly tripled the headline number overnight; comparisons before and after that change require care..

The key property: you can write a check, swipe a card, or transfer M1 balances instantly.

What happened in 2020

Reported M1 roughly quadrupled between March and December 2020, from about $4.3 trillion to about $17.8 trillion. Stimulus payments landed directly in checking accounts, expanding M1 rapidly. Most of the jump was the May 2020 redefinition that folded savings deposits into M1; the rest was real spending-power injection verify×DON'T TRUST, VERIFYClaim: US M1 expanded sharply in 2020 due to a combination of the May 2020 Fed redefinition and stimulus-driven deposit growth.Verify at: FRED M1SL historical chart ↗ Source 4 in the list belowThe redefinition is documented in Federal Reserve H.6 release notes; the stimulus-driven component is observable in M2 (which is unaffected by the M1 redefinition)..

M2: broad money

What it contains: M2 is M1 plus small-denomination time deposits (under $100,000) and retail money market fund balances, subject to H.6 exclusions. Savings deposits are already in M1 under the post-May-2020 definition; do not count them twice.^[2]

As of July 2026: approximately $23.2 trillion verify×DON'T TRUST, VERIFYClaim: US M2 is approximately $23.2 trillion as of July 2026 (stamped from the site's FRED snapshot).Verify at: FRED M2SL ↗ Source 3 in the list belowM2 is the most-watched US monetary aggregate. It grew roughly 41% from Feb 2020 through Apr 2022.. M2 is the broadest money measure the Federal Reserve still publishes.

The inflation relationship

M2 growth is context, not a countdown to consumer inflation. The Bank of England puts the weight on spending decisions and monetary conditions, so read money against output, demand and supply instead of forcing a universal 12-to-24-month lag.^[1]

The velocity problem

MV = PQ is an accounting identity once you define velocity as nominal spending divided by money. On its own it forecasts nothing: velocity and real output move while M2 moves. Prices can rise even as velocity falls, when the rest of the picture outweighs it.^[1]

Your savings accounts and money market funds are M2 money. When you hold SPAXX in a Fidelity Cash Management Account, that balance is part of M2. Detail at Cash Management.

M3: the discontinued measure

What it contained: M2 plus large time deposits (over $100,000), institutional money market funds, repurchase agreements, and Eurodollars.

The Federal Reserve stopped publishing M3 in March 2006, citing the cost of data collection relative to its marginal value for monetary policymonetary policyThe central bank's control of money supply and interest rates to influence the economy. verify×DON'T TRUST, VERIFYClaim: The Federal Reserve discontinued M3 publication in March 2006.Verify at: Federal Reserve M3 discontinuation announcement ↗ Source 5 in the list belowVarious analysts (Shadow Government Statistics, Mark Skousen) reconstruct M3 from other published data; the reconstructions vary..

Critics argue this removed transparency at a time when shadow banking was expanding. Some analysts reconstruct M3 estimates from other data sources, but no official series replaces it.

Bank balance sheets: how loans create deposits

Illustrative $1,000 loan, with no simultaneous offsetting transactions:

• The originating bank records a $1,000 loan asset and a $1,000 deposit liability; the borrower has a deposit asset and matching debt.^[1]
• If the borrower pays a customer at another bank, the deposit moves to the receiving bank and reserves transfer between the banks for settlement.^[1]
• The originating bank must manage the resulting funding and liquidity need; creating a deposit is not creating bank equity or free resources.^[1]
• Capital rules, liquidity, funding costs, credit risk, profitability and creditworthy demand constrain further lending.^[1]
• When principal is repaid from deposits, both the loan and deposits shrink. A write-off instead reduces the bank’s loan asset and equity; it does not automatically erase someone else’s deposit.^[1]

An observed broad-money/base-money ratio is an accounting ratio, not a causal mechanism that turns each deposit into a predetermined multiple of loans. U.S. reserve requirement ratios were reduced to zero effective March 26, 2020; banks still need reserves for settlement and must meet other constraints.^[1][3]

Post-2008 change

Paying interest on reserves changes the return on a safe bank asset and helps implement monetary policy. It does not turn lending to households into a physical transfer of reserve balances, and zero reserve requirements are not a license to lend without limit.^[1][3]

Why this matters for your money

M0 matters because

When the Fed expands the base through bond purchases, it signals whether tight or loose monetary conditions are coming. The federal funds rate targets the overnight lending rate for M0 reserves between banks. This is the rate that flows through to your savings account yield. Detail at Cash Management.

M1 matters because

Rapid M1 growth signals immediate spending power entering the economy. Your checking account is M1. Watching M1 growth rates alongside CPI gives early warning of inflationary pressure (with the redefinition caveat: pre- and post-May 2020 are not directly comparable).

M2 matters because

Your savings sit inside broad money, but your real return depends on after-tax interest against the inflation measure that applies to you. M2 growth does not measure that. Run it through the real-return calculator with matching periods.^[2][6]

This is the structural case for holding some assets outside M2: assets whose supply cannot be expanded by policy. Index funds represent claims on real productive output. Bitcoin has a fixed supply regardless of monetary conditions. Detail at Bitcoin Allocation, Index Funds, and the visualization at M2 vs Inflation Tracker.

What this changes for tomorrow

• Bookmark M2SL and note the units, seasonal adjustment, observation date and revisions. Compare its growth against prices and output; it is not a timed trading signal.^[1][2]
• Cash loses purchasing power whenever your after-tax yield sits below inflation, and M2 growth alone does not tell you when. Size your cash to the expenses you can name and the risk you can carry; assets outside M2 can lose a lot.^[6][7]
• Assets outside M2 (real estate, productive equity, sound-money assets) are the structural hedgehedgeAn investment made to offset potential losses in another position, like buying gold to protect against currency declines.. Sizing depends on your situation; the tools at budget builder and Bitcoin allocation range help.