Summary

A recent article from the Mises Institute highlights a growing disconnect between Federal Reserve messaging and actual monetary conditions.

Despite repeated claims from Fed Chairman Jerome Powell that policy remains “restrictive,” the data tells a different story. The money supply has increased in five of the past six months and is now growing at its fastest year-over-year pace in nearly four years.

As of February 2026:

  • Money supply growth reached 5.56% year-over-year, up from 2.39% a year earlier
  • Total money supply exceeded $20.4 trillion, rising by $1 trillion in just seven months
  • Broader measures like M2 have climbed to all-time highs above $22.5 trillion

The article uses the Rothbard-Salerno “True Money Supply” (TMS) metric, which aims to more accurately reflect real monetary expansion than traditional measures like M2.

Perhaps most notably, nearly 30% of the current money supply has been created since 2020, and more than two-thirds has been created since the 2008 financial crisis.

This surge is occurring despite weakening economic conditions, including sluggish GDP growth, flat employment trends, and declining consumer confidence.

Cole Metals Key Takeaway

The Federal Reserve may say policy is restrictive—but the money supply says otherwise.

You can’t have rapidly expanding money supply and call it tight policy with a straight face. At best, it’s a relative comparison to even looser periods. At worst, it’s narrative management.

What matters isn’t the label—it’s the number of dollars in the system.

And right now, that number is rising. Again.

Why It Matters to Investors

This is the distinction most miss.

Economic weakness does not prevent monetary expansion—it often triggers it.

When growth slows, the response is typically:

  1. Lower interest rates
  2. More liquidity
  3. Renewed asset purchases (QE)

That means more dollars chasing the same pool of goods and assets over time.

For investors focused on preserving purchasing power, the implication is straightforward:

Assets tied to the financial system depend on policy.

Real assets—like physical gold—respond to the long-term expansion of the money supply itself.

The Fed’s words say “restrictive.” The money supply says otherwise.

And over time, it’s the money supply—not the messaging—that determines purchasing power.

Read the full article here.