Bitcoin vs. M3: Why the Fed’s Numbers Don’t Add Up

Show Notes

Matthew unpacks the truth about the U.S. money supply, explaining the differences between M0, M1, M2, and M3—and why the Fed’s numbers don’t tell the full story. He walks through how the reclassification of savings accounts in 2020 dramatically inflated M1, and why M3 (which includes institutional money, repos, and money market funds) gives a clearer picture of actual dollar liquidity. Using a reconstructed version of M3, Matthew shows that the U.S. money supply hit $35.4 trillion by the end of 2024, and explains how repo markets and shadow banking have created a system far more complex than the average investor realizes. He also breaks down the role of Eurodollars, which aren’t even counted in these figures, yet represent trillions in offshore dollar liquidity. Finally, Matthew compares this to Bitcoin’s market cap, arguing that Bitcoin should only be measured against base money (M0 + reserves)—not M3—since it’s a bearer asset, not a credit instrument. As of 2024, Bitcoin has reached 33% of the U.S. monetary base, up from just 18% in 2021, a signal of growing adoption and market trust. Porkopolis Economics - Episode 198 Chapters: 00:00:02 - US Money Supply Update 00:05:03 - Understanding Money Market Funds 00:07:50 - Understanding U.S. Money Supply Dynamics 00:12:34 - Understanding M3 Money Supply 00:14:50 - Understanding M3 and Repurchase Agreements 00:19:04 - Money Supply Trends Before the GFC 00:21:53 - Understanding M2 and M3 Money Supply 00:25:21 - US Money Supply Update 00:28:33 - Understanding Dollar Liquidity and Bitcoin 00:31:11 - Bitcoin vs. Global Money Supply 00:33:16 - Bitcoin vs. US Monetary Base 00:37:33 - Bitcoin's Power Curve Explained 00:40:32 - Global Trends in Bitcoin and Money Supply 00:42:33 - Bank Reserves and Interest Rate Tightening 00:44:44 - Central Banks and Inflation Concerns 00:47:54 - Federal Reserve's Reactive Monetary Policy 00:52:12 - Bitcoin and Bank Reserves Analysis 00:54:52 - Bitcoin Adoption vs. Money Supply 00:57:20 - Dollar Growth Rate Analysis Show Sponsors: Trezor - https://trezor.io/ Debifi - https://debifi.com/ Donations to Porkopolis Economics via BTCPay are appreciated: https://donations.porkopolis.io/ Porkopolis Economics covers macroeconomics, money, geopolitics and sports from the creator of the Crypto Voices podcast, Matthew Mezinskis. Data-driven. Scale matters. Smaller, decentralized states means more opportunity for liberty than larger ones. Host: Matthew Mezinskis https://porkopolis.io https://x.com/1basemoney Show content is not investment or financial advice in any way.