M2 Money Supply vs CPI
Monetarists argue money-supply growth eventually drives inflation. The 2020–22 episode — M2 surging, then CPI surging — is the clearest test in a generation.
M2SLCPIAUCSL- M2
- CPI
The quantity theory of money holds that, in the long run, the inflation rate roughly equals money growth minus real-output growth. That relationship broke down in the late 2010s — M2 grew steadily while inflation stayed below the Fed's 2% target — and many economists concluded monetarism was dead.
Then 2020 happened. M2 grew 25% year-over-year, the fastest ever recorded. CPI followed two years later, peaking at 9.1% in June 2022. M2 contracted in 2023 — a rare event — and CPI cooled sharply afterward. Whether that was coincidence or causation is actively debated, but the episode resurrected interest in money-supply analysis that had been out of fashion for a decade.
Comparing M2 and CPI year-over-year growth directly gives the cleanest view of the relationship. Monetarists look for M2 acceleration as a leading signal for inflation roughly 12–24 months ahead.
Related comparisons
CPI vs PCE
CPI and PCE are the two main U.S. inflation gauges. They usually move together but measure different baskets with different weights — and the gap between them drives where the Fed sets policy.
Core CPI vs Core PCE
Core measures strip out food and energy — the two most volatile CPI and PCE components — to reveal the underlying inflation trend. Core PCE is the Fed's single most-watched inflation gauge.
CPI vs PPI
The Producer Price Index (PPI) measures prices received by domestic producers. Changes in PPI often show up in CPI several months later — making PPI a leading indicator of consumer inflation.
10-Year vs 2-Year Treasury Yield
When 2-year yields exceed 10-year yields the curve is inverted — and inversions have preceded every U.S. recession since 1955. Compare the two benchmark yields directly.
Fed Funds Rate vs 10-Year Treasury Yield
The federal funds rate is the Fed's lever on short-term interest rates; the 10-year Treasury yield is set by the bond market. Comparing them shows the market's read on Fed policy.
30-Year Mortgage vs 10-Year Treasury
The 30-year fixed mortgage rate closely tracks the 10-year Treasury yield plus a spread that reflects credit risk, prepayment risk, and mortgage-backed-security pricing.