The rules of money are being stretched

The U.S. money supply just hit a record high. M2 has climbed to nearly $22 trillion. It should not be read as just a number. Most of you know this but a reminder never hurts: M2 is a core indicator of how much liquidity circulates within the system. It includes cash, checking and savings deposits, and money market securities, the functional base layer of financial value. And when it expands this rapidly, the implications for real assets, valuations, and inflation hedges are far from benign. When growth slows and inflation stays sticky, the response seems to always be the same: print more. But at some point, that trade-off starts to show cracks.

Arthur Hayes made a sharp point this week. He said the only way the system stays afloat is by having a constant buyer for government debt, meaning someone who won’t ask questions. That can be a central bank, a passive investor, or even a stablecoin issuer. Investors no longer buy sovereign debt because they believe in the issuer, but because the system is designed that way.

Bitcoin predictability is overlooked

At the same time, demand for digital assets is picking up again. Not because of the return of a media frenzy, but because people are getting used to the idea that assets like bitcoin can offer protection. They don’t promise returns (only bitcoin treasury companies do), but they do offer clear rules. And in an environment where policy changes are constant, that predictability is rare.

Some national currencies have held up better than expected, not due to economic strength, but because global capital continues to chase yield and stability where it can find it. The euro, for instance, has benefited from relatively contained inflation and hawkish signaling from the ECB. Meanwhile, the U.S. is in a difficult spot. Consumer confidence is dropping, inflation hasn’t gone away, and yet pressure is building on the Fed to cut rates. Trump is pushing for lower rates again. Even some Fed governors are starting to agree.

This mix, rising debt, political pressure, policy uncertainty, is exactly why bitcoin and other fixed-supply assets are drawing attention. Investors don’t have to be crypto-native to see the appeal of something that isn’t tied to a government’s balance sheet.

Texas made headlines this week by announcing a publicly funded bitcoin reserve. It’s not a huge amount ($10 million) but it’s a symbolic step. It shows that even within traditional institutions, the idea of having exposure to non-inflationary assets is gaining ground.

We’re not in a crisis, but the landscape is shifting. The rules of money are being stretched. In that kind of world, assets that don’t change the rules every few months tend to stand out.