What is M2 and Why Should You Care?

You may have heard the term M2 many times. Today, let’s look at the statistics of M2 growth over the past 10 years, and see how it has affected food prices and salaries, in a simple.

What is M2?

M2 is a measure of the “money supply” in the economy. It includes:

• Cash
  
  

• Checking deposits (M1 – money that can be spent immediately)
  
  

• Savings deposits
  
  

• Small time deposits
  
  

• Money market funds
  
  

Simply put, M2 is the money that individuals and businesses can use for spending or investing relatively quickly.

How Does M2 Affect People?

• If M2 increases, more money circulates in the system. Banks lend more easily, interest rates go down, people can borrow to buy houses, cars, or start businesses. The economy looks lively. But in the long run, inflation risk rises (prices go up).
  
  

• If M2 decreases, less money circulates. Borrowing gets harder, interest rates rise, spending slows down, businesses struggle. Prices may not rise, but the economy risks recession.
  
  

In short, M2 directly impacts cost of living, interest rates, inflation, and borrowing opportunities, things that affect everyone’s daily life.

Why Should You Care?

Example:

Imagine If you earn $10 while the country’s total money supply is $20 Trillion. Your relative purchasing power is 1 in 20 Trillion.

Five years later, if the money supply grows to $30 Trillion, your $10 is now worth 1 in 30 Trillion. Even if you do nothing, your money loses value.

In the financial world, especially in stocks and crypto, this is often called dilution or devaluation.

If productivity cannot keep up with money supply growth, prices will rise while your money loses purchasing power based on simple demand and supply principles.

10-Year M2 Growth U.S. and Thailand (TradingView Data)

• ปี 2555  /   $9.43 Trillion    /   ฿12.02 Trillion

• ปี 2556  /   $10.21 Trillion  /   ฿13.79 Trillion

• ปี 2557  /   $11.04 Trillion  /   ฿14.78 Trillion

• ปี 2558  /   $11.54 Trillion  /   ฿15.11 Trillion

• ปี 2559  /   $12.32 Trillion  /   ฿15.71 Trillion

• ปี 2560  /   $13.43 Trillion  /   ฿16.17 Trillion

• ปี 2561  /   $13.77 Trillion  /   ฿16.72 Trillion

• ปี 2562  /   $14.21 Trillion  /   ฿17.45 Trillion

• ปี 2563  /   $15.77 Trillion  /   ฿18.33 Trillion

• ปี 2564  /   $15.77 Trillion /   ฿20.41 Trillion

• ปี 2565  /   $21.77 Trillion  /   ฿ 21.66 Trillion

In 10 years U.S. M2 increased by ~130% (avg. 8.7% per year),  Thailand M2 increased by ~80% (avg. 6% per year)

Since the U.S. has the world’s largest economy, its M2 movements affect the entire globe.

10-Year Comparison Salary and Food Prices (Thailand)

• ปี 2555  /  ฿13,000   /   ฿25-30 

• ปี 2556  /  ฿14,000   /   ฿25-30 

• ปี 2557  /  ฿14,000   /   ฿25-30 

• ปี 2558  /  ฿15,000   /   ฿25-30 

• ปี 2559  /  ฿15,000   /   ฿30-40 

• ปี 2560  /  ฿15,000   /   ฿30-40 

• ปี 2561  /  ฿15,000   /   ฿40-50 

• ปี 2562  /  ฿15,000   /   ฿40-50 

• ปี 2563  /  ฿ 5,000    /   ฿40-50

• ปี 2564  /  ฿15,000   /   ฿40-50 

• ปี 2565  /  ฿15,000   /   ฿50-60 

In 10 years Salary increased ~15.38% (avg. 1.44% per year), Food price increased ~100% (avg. 7.18% per year)

Final Takeaway

Tracking M2 is essential, because every newly created dollar eventually flows into

• Businesses → Employees → Owners & shareholders Sometimes Back to Consumption cycles Sometime go to Investments Or Store of value
  
  

If you hold cash, its economic value declines over time. That’s an unavoidable reality.

However, investing without knowledge is even riskier. Study your options for storing value and manage your risks wisely.