Money supply keeps rising, so is buying assets now always the better move?

Does more money always mean assets go up?

Over long spans money supply and asset prices have moved in the same direction, but there have been decade-length stretches where they did not, and Hong Kong holds one of the clearest reverse examples. From April 1997 to December 2003, M2 grew 1.296 times while the composite CPI fell to 0.889 times its starting level. Money expanded by roughly 30% and prices fell by roughly 11% over the same six years and eight months.

Hong Kong Monetary Authority · Monthly Statistical Bulletin Table 2.2.1

When the rate regime changes, does the winning asset change?

It does, and the clearest record is in US money and gold. The table below uses US M2 in USD billion and gold in USD per troy ounce, all at the stated months.

Visual guide

When the rate regime changes, does the winning asset change?

1. 1971-01 → 1980-01

   US M2

   633.0 → 1,482.7

   Gold

   38 → 675

   Note

   Gold rose far faster than money

2. 1980-01 → 2000-01

   US M2

   ×3.147

   Gold

   ×0.421

   Note

   Nominal −57.9%; US CPI ×2.171, so real −80.6%

3. 2008-12 → 2021-12

   US M2

   ×2.621

   Gold

   ×2.194

   Note

   Money and gold moved together again

4. 2021-12 → 2026-07

   US M2

   ×1.080

   Gold

   ×2.464 (to 2026-08)

   Note

   Gold moved while money growth slowed

Period	US M2	Gold	Note
1971-01 → 1980-01	633.0 → 1,482.7	38 → 675	Gold rose far faster than money
1980-01 → 2000-01	×3.147	×0.421	Nominal −57.9%; US CPI ×2.171, so real −80.6%
2008-12 → 2021-12	×2.621	×2.194	Money and gold moved together again
2021-12 → 2026-07	×1.080	×2.464 (to 2026-08)	Gold moved while money growth slowed

The 1980 to 2000 stretch is the one to sit with. Paul Volcker took office in August 1979, and the monthly average federal funds rate peaked at 19.10% in June 1981. Money supply more than tripled over those twenty years, and the asset most associated with money printing lost four fifths of its real value.

What does Hong Kong’s own data say?

Hong Kong’s long record shows money outrunning prices by a wide margin, with the gap concentrated in specific periods rather than spread evenly.

Period	M2	CPI (2010=100)
1997-04 → 2003-12	×1.296	×0.889
2003-12 → 2011-12	×1.920	×1.218
2011-12 → 2021-12	×1.988	×1.278
2021-12 → 2026-06	×1.154	×1.080

Across the whole span, M2 rose from 1,625,437 to 9,283,575 HKD million between April 1997 and June 2026, a factor of 5.711. The CPI went from 99.887 in April 1997 to 149.628 in July 2026, a factor of 1.498. Money grew about 5.7 times; the consumer basket grew about 1.5 times.

The distinctive part is why the first row looks the way it does. Under the Linked Exchange Rate System the HKD is held in a band around 7.75 to 7.85 per USD, quoted at 7.8425 in August 2026. Hong Kong therefore imports the US interest-rate regime whether or not it fits the local cycle. In the years after 1997 that meant carrying an external rate setting through a domestic downturn, and the deflation in that first row was the cost.

What is observed right now?

At its meeting on 29 July 2026 the FOMC kept the target range at 3.50% to 3.75%, with three members dissenting in favour of a hike. That is an observation, not a signal about the next move. For Hong Kong it matters because the link means this range, not a locally chosen one, frames local funding costs.

Federal Reserve · FOMC calendars and statements

So is buying sooner still better?

Only if the asset outpaces what the money costs you while you hold it. Buying earlier is usually funded by borrowing or by giving up a deposit rate, and both of those are priced off the imported US regime. That funding cost is the break-even the asset has to clear, which is why the same purchase can be a good decision in one rate regime and a poor one in another. The history above cannot tell you which regime you are in. It can tell you that the gap between money growth and asset prices has stayed open for six to twenty years at a time.

Compare your own amount against M2 and CPI →