Money Supply Calculator (M1 and M2)

Money supply is the total amount of money circulating in an economy, measured in layers that get progressively broader.

M1 is the narrowest and most liquid measure. It includes currency in physical circulation (coins and bills outside the banking system) plus demand deposits, meaning the balances you can spend instantly with a check or debit card.

M1 = Currency in Circulation + Demand Deposits

M2 adds the less-liquid forms. Savings accounts, retail money market mutual funds, and small certificates of deposit (under $100,000) are included because they can be converted to spending money quickly, just not instantly.

M2 = M1 + Savings Deposits + Money Market Funds + Small Time Deposits

The United States stopped reporting M3 in 2006. M3 had added large-denomination CDs, institutional money market funds, and repurchase agreements. Useful for tracking shadow-banking flows, but expensive for the Fed to compile, so it went. Most central banks now work with M1 and M2.

One thing that trips people up when they check against FRED. In May 2020 the Federal Reserve moved savings deposits out of the M2-only bucket and into M1. Published US M1 jumped overnight from about $4 trillion to about $16 trillion, and it has run near $18 trillion since. Nothing about the economy changed; a definition did.

This calculator uses the older textbook split, where M1 is currency plus demand deposits and savings sit in M2. That is what almost every economics course still teaches and what almost every exam question expects. If you are comparing your answer against a Federal Reserve series published after May 2020, add the savings figure to M1 before you compare. M2 is unaffected either way, which is one reason economists mostly quote M2.

Why these numbers matter: central banks watch M2 growth closely. Rapid M2 expansion often precedes inflation, because more money chasing the same goods pushes prices up. Milton Friedman’s famous claim that inflation is “always and everywhere a monetary phenomenon” was largely about M2 growth rates.

During COVID-19, US M2 grew about 25% in a single year, the fastest since World War II. The subsequent inflation surge, starting in 2021, tracked almost exactly what monetary economists would have predicted from that expansion, with roughly an 18-month lag.

The five fields take any unit, as long as you use the same one throughout. The placeholders are full dollar figures at US scale, but billions work just as well for a textbook problem and so does a plain hundred for a classroom exercise about a single small bank.

Those placeholders are rough US numbers and add to an M2 near $21 trillion, which is where the aggregate has sat since 2023. Feed that M2 into the velocity calculator on this site against $25 trillion of nominal GDP and it returns a velocity near 1.19, which is the figure that page publishes.