America’s cost-of-living crisis is not primarily a story about prices rising — it is a story about the dollar losing purchasing power, and the U.S. M2 money supply hitting a record $23.1 trillion in May 2026 is the clearest signal yet. Speaking on ITM Trading’s channel on July 2, 2026, analyst Taylor Kenney argues that higher grocery and utility bills are the symptom, while accelerating currency dilution is the disease.

Kenney’s central point is a reframing: when Americans say they “can’t afford things,” they usually blame prices, but the underlying driver is that every dollar buys less than it did the day before. Below we break down the record M2 print, the global retreat from the dollar, and why central banks are quietly accumulating gold.

Key takeaways

  • M2 hit a record $23.1 trillion in May 2026, per data Kenney cites, with the largest one-month increase in five years.
  • The dollar has lost roughly 30% of its purchasing power over six years — about 5% per year, compounding.
  • The USD’s share of global FX reserves fell from ~72% to 56% over the past 25 years, and a survey of ~75 central banks found more plan to cut dollar holdings than at any prior point.
  • Gold is the “defining asset of the moment” for reserve managers, driven by geopolitical risk and doubts about the international monetary system.
  • Kenney’s thesis: dollar-denominated savings can’t outrun debasement, so assets without counterparty risk — physical gold and silver — are the hedge.

The record M2 print — and why speed matters

The U.S. M2 money supply — checking accounts, savings, and money market funds — reached a record $23.1 trillion in May 2026, according to the figures Taylor Kenney presents. M2 has spiked before, most visibly during the 2008 financial crisis and the 2020 pandemic response, and the brief 2022 tightening that was supposed to “put the genie back in the bottle” lasted barely a year before the trend resumed.

What alarms Kenney is not just the size but the velocity: she describes the latest reading as the largest single-month M2 increase in five years. That acceleration is happening even as officials signal the opposite — she notes that former Fed governor Kevin Warsh publicly claimed inflation risks are “disappearing,” a claim she flatly disputes.

Kenney’s mechanism is simple. When the money supply grows faster than real GDP, each unit of currency represents a smaller slice of real output. Her analogy: pouring water into a half-glass of orange juice raises the volume while every sip tastes more watered down. That is dollar devaluation in one image — and it connects directly to the framework we examined in the velocity of money and the wealth gap, where GDP-over-M2 is the ratio that exposes how fast dilution outpaces earnings.

The world is quietly de-dollarizing

The second pillar of Kenney’s argument is that foreign demand for dollars is structurally weakening. She cites a survey of roughly 75 central banks reporting that, for the first time, more institutions plan to shrink their dollar reserve holdings than to grow them. In the survey figures she references, 24% said they would decrease USD holdings, 60% would hold steady, and only 16% would increase — a net negative tilt against the world’s reserve currency.

Kenney’s caution here is worth flagging: she rejects the “for the first time” framing in the headlines. The de-dollarization trend is not new. The dollar’s share of global foreign exchange reserves has fallen from roughly 72% to 56% over the past 25 years, she notes, and she expects the 2026 figure to continue declining once it’s published.

The problem this creates at home is a buyer shortage for U.S. debt. Kenney argues the United States has crossed a threshold where it must borrow more simply to service interest on existing debt — even as its traditional foreign buyers step back. If central banks are neither adding to nor maintaining Treasury holdings, the question becomes: who absorbs the new issuance? That same demand gap sits at the center of our analysis of how stablecoins are being positioned to absorb Treasury debt.

Why central banks are moving into gold

If reserve managers are trimming dollars, where is the money going? Kenney’s answer is gold. She cites reserve-manager sentiment describing gold as “the defining asset of the moment,” with a record share of central banks planning to increase allocations — driven by geopolitical risk and, tellingly, “growing doubts about the stability of the international monetary system.”

Her rhetorical point lands hard: if the institutions that run the monetary system are signaling doubt about its stability, that is a message about what comes next. The stated reasons for buying gold — diversification, protection against geopolitical risk, and an inflation hedge — all point the same direction, away from counterparty-dependent paper and toward a neutral reserve asset.

Kenney also references Treasury Secretary Scott Bessent’s recent comments on Venezuela and Iran, arguing he “said the quiet part out loud” — framing U.S. policy around keeping the dollar “at the center of the system” before correcting himself. Whether or not one accepts that reading, the central-bank gold-buying data is consistent with the broader shift we’ve tracked in China’s move toward a new gold-anchored system.

The gold price paradox

Here Kenney addresses the obvious objection: if the case for gold is so strong, why is the price soft? With gold near $4,000/oz at the time of recording, she acknowledges the spot price is set by many forces — paper-market selling, liquidity stress from private credit, and forced liquidations — that can push the metal down in the short term.

Her framework separates spot price from thesis. The near-term price reflects market plumbing; the long-term case reflects monetary debasement, and she argues the latter “has only gotten stronger.” This is the one original take to weigh: Kenney treats a falling gold price during accelerating M2 growth not as a contradiction but as a buying window — a claim that is testable over the coming quarters. It echoes the dollar-cost-averaging discipline that Clem Chambers laid out in his Fed “printathon” argument.

The bottom line on purchasing power

The through-line is purchasing power. Kenney’s figure — a ~30% loss over six years, roughly 5% annually and compounding — explains why so many households feel they’re running in place. If real returns on dollar savings sit below that erosion rate, “saving” in dollars is quietly a loss.

None of this is a price prediction, and Kenney’s employer sells the very assets she recommends, so the source carries an obvious commercial incentive. But the underlying data points — record M2, a shrinking dollar reserve share, and record central-bank gold demand — are verifiable and worth watching regardless of the sales pitch attached.

Frequently asked questions

Is dollar devaluation the same as inflation?

They are closely related but not identical. Inflation describes prices rising; dollar devaluation describes each dollar’s purchasing power falling. Taylor Kenney’s argument is that rising prices are the visible symptom, while the expansion of the money supply relative to real output is the underlying cause. As of July 2026, she cites a record $23.1 trillion M2 reading as evidence.

How much purchasing power has the dollar lost?

According to the figures Kenney presents, the U.S. dollar has lost at least 30% of its purchasing power over the past six years — an average of roughly 5% per year, compounding. That means dollar-denominated savings earning less than about 5% annually are losing real value.

Why are central banks buying gold instead of dollars?

Kenney cites reserve-manager surveys showing gold as the “defining asset of the moment,” with a record share of central banks planning to increase allocations. The stated motives are diversification away from the dollar, protection against geopolitical risk, and hedging inflation — alongside growing doubts about the stability of the international monetary system.

Why is the gold price falling if the case for gold is strong?

Kenney attributes near-term weakness to market mechanics — paper-market selling, liquidity stress from private credit, and forced liquidations — rather than a change in the long-term thesis. With gold near $4,000/oz at recording, she argues the monetary case has strengthened, not weakened, and treats the pullback as a potential accumulation window.

This analysis is based on Taylor Kenney’s July 2, 2026 video on the ITM Trading channel. It is educational commentary, not financial advice. Always do your own research before making investment decisions.