The curious behavior of M2

Found something interesting in the course of doing my day job. Check out M2 (since 1995) against its trend:

Compare that with the longer-term picture to see how unusual this is:

This raises a few interesting questions. The obvious one: why did this happen? I can say with extreme confidence that the level of M2 was never a serious topic of conversation at FOMC meetings from 1995-2006 (anything after that will remain a mystery until the transcripts are released), so you need a better explanation than that. Slightly less obvious: does this matter? All thoughts are welcome.


About Matthew C. Klein
I write about the economy and financial markets for Bloomberg View. Before that I wrote for The Economist on a fellowship provided by the Marjorie Deane Financial Journalism Foundation. I have worked at the world's largest hedge fund and read every FOMC transcript since May, 1987.

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