The Money Machine Scoreboard

Across ten episodes, we’ve tracked the vital signs of America’s monetary system through ten FRED series. Each tells part of the story. Together, they reveal the scale of the transformation. Here is the complete scoreboard — what each metric was before the 2008 crisis, what it peaked at, and where it stands today.

If you could distill the entire series into a single chart, it would be this one: the Fed’s total assets from 2003 to 2026. The line tells the story of every major monetary event of the 21st century. The gentle rise from $700 billion to $900 billion (2003–2007). The QE1 spike to $2.1 trillion. The QE2 and QE3 staircase to $4.5 trillion. The shallow QT1 descent to $3.8 trillion and the repo crisis that stopped it. The COVID vertical to $7.3 trillion and the long grind to $9 trillion. Then QT2’s three-year descent to $6.5 trillion — and the upturn.

Every crisis added a floor that the Fed couldn’t go back below. Before 2008: $900 billion. After QE1: $2 trillion. After QE3: $3.8 trillion. After COVID: $6.5 trillion. Each crisis ratcheted the system to a higher level. The balance sheet is like a staircase that only goes up — it may descend a few steps between crises, but the landing is always higher than the last one.

The simplest way to understand the monetary revolution is to compare two snapshots: January 2008 and today. In January 2008, the Fed’s balance sheet was $922 billion. Bank reserves were $13 billion. The Treasury General Account held $9 billion. M2 was $7.5 trillion. Velocity was 1.95. The fed funds market traded $200 billion a day. The system ran on scarcity, precision, and trust.

Today, the balance sheet is $6.7 trillion. Reserves are $3.0 trillion. The TGA holds $848 billion. M2 is $22.7 trillion. Velocity is 1.41. The fed funds market is an afterthought. The system runs on abundance, interest on reserves, and a permanent infrastructure of trillions. The tools are different. The operating framework is different. The scale is different. Even the philosophy is different: the old Fed controlled money by rationing a tiny supply of reserves; the new Fed controls money by setting the price of an ocean of reserves.

The numbers that changed the most are the ones closest to the Fed. Reserves went from $13 billion to $3 trillion — a 230-fold increase. The TGA went from $9 billion to $848 billion — a 94-fold increase. The balance sheet went from $922 billion to $6.7 trillion — a 7.3-fold increase. These are the proximate instruments of monetary policy, and they have been permanently transformed.

The numbers that changed the least are the ones furthest from the Fed. Currency in circulation went from $790 billion to $2.4 trillion — a healthy 3x growth that tracks population and GDP. M2 went from $7.5 trillion to $22.7 trillion — also about 3x. These are the measures that most directly affect people’s lives: the cash in their wallets and the money in their bank accounts. They grew substantially, but not the 7x or 230x that the plumbing metrics experienced.

Each episode in this series traced one dimension of the money machine. Here’s what we found:

Episode 1: What Is Money? — M2 grew from $287 billion in 1959 to $22.7 trillion today. The money supply has increased 79-fold, with $6 trillion of that coming during the pandemic alone. At $66,700 per capita, there is more M2 money per American than at any point in history.

Episode 2: The Velocity Collapse — M2 velocity fell from a peak of 2.20 in 1997 to an all-time low of 1.13 during COVID. Each dollar of M2 now generates less economic activity than at any point since 1959. The recovery to 1.41 remains far below historical norms.

Episode 3: Cash Is King — Physical currency in circulation grew from $4 billion in 1918 to $2.42 trillion. Despite predictions of a cashless society, COVID drove the largest surge in cash demand since World War II. Americans hold about $7,100 in physical currency per person.

Episode 4: QE — The Fed’s Printing Press — Three rounds of QE between 2008 and 2014 expanded the balance sheet from $905 billion to $4.5 trillion. The Fed became the largest holder of U.S. Treasury and MBS securities in the world.

Episode 5: The Great Unwind That Wasn’t — QT1 tried to shrink the balance sheet from $4.5 trillion. After shedding just $700 billion over 23 months, the September 2019 repo crisis forced the Fed to stop. The overnight repo rate spiked to 10% when reserves fell to $1.39 trillion.

Episode 6: The COVID Money Cannon — The Fed added $3 trillion to its balance sheet in ten weeks during the COVID crisis, eventually reaching a peak of $8.97 trillion. Combined with $5 trillion in fiscal stimulus, it produced the highest inflation in 40 years.

Episode 7: QT2 — Shrinking the Balance Sheet — The longest QT in history ran for 42 months and shed $2.4 trillion. It survived the SVB banking crisis, which temporarily added $297 billion back. Unlike QT1, it ended quietly rather than in panic.

Episode 8: Bank Reserves and the Plumbing — Reserves went from $13 billion to $878 billion in a single year (2008–2009) and eventually peaked at $3.86 trillion. The Fed moved permanently from a “scarce reserves” to an “ample reserves” operating framework.

Episode 9: The Treasury’s Checking Account — The TGA swung from $45 billion during the 2023 debt ceiling crisis to $1.82 trillion during COVID pre-funding. It has become an unintentional third lever of monetary policy, rival to the Fed’s own QE and QT in its impact on liquidity.

The question that hangs over every number in this series is: can the system ever go back? The answer, for all practical purposes, is no. The pre-2008 monetary system required a specific set of conditions — small bank balance sheets, minimal regulatory requirements, a federal funds market that traded hundreds of billions daily, and a Fed balance sheet under $1 trillion — that no longer exist and cannot be recreated without dismantling the regulatory framework built after the crisis.

The new system is bigger, more complex, and arguably more stable — but it comes with trade-offs. The Fed now holds $6.4 trillion in government securities, making it the dominant player in both the Treasury and MBS markets. Its decisions about purchasing or selling directly affect asset prices, interest rates, and financial conditions in ways that a $900 billion balance sheet never could. The Fed’s footprint in financial markets is permanent and structural.

The velocity decline tells a deeper story. Even as money supply tripled, velocity fell by 36% from its 1997 peak. Money is being created faster than it circulates. This is partly demographics (aging populations save more), partly structural (much of the money supply sits in institutional accounts, money market funds, and bank reserves rather than circulating through the consumer economy), and partly behavioral (the savings rate, while volatile, has structurally shifted higher since COVID). The economy generates GDP of $1.41 for every dollar of M2, compared to $2.20 three decades ago.

None of this is inherently good or bad. It’s simply the reality of a monetary system that has been rebuilt from the foundation up over eighteen years of crisis response. The numbers in this scoreboard are the vital signs of that system — and they tell us where we are, even if they can’t tell us where we’re going.