Stephen Miran, who briefly served as a Federal Reserve Governor from September 2025 to January 2026, has reignited discussion around monetarism with a newly published research paper. The study argues that monetary aggregates like M2 money supply should carry more weight in Fed policy decisions, a shift that could have ripple effects on inflation control and digital currency regulation.

Monetarism’s comeback and its implications

Co-authored with economists Peter Ireland and Nouriel Roubini, the July 2026 paper titled “A return to monetarism?” challenges the Fed’s recent reluctance to prioritize money supply data. It suggests that measures such as the Divisia monetary aggregates offer superior foresight into inflation and economic growth trends than current Fed tools. While not advocating a full return to the strict money-supply targeting Milton Friedman championed in the 1980s, the paper calls for monetary aggregates to assume a "significant role" alongside existing mechanisms.

The authors highlight a missed warning during the post-pandemic period when M2 surged as the Fed kept interest rates near zero. They argue that closer attention to monetary aggregates could have prompted earlier tightening, potentially softening the severe inflation spike that followed. Using updated P-star models that connect money supply levels to inflation forecasts, the study finds that current Fed policy sits neutrally aligned with inflation expectations.

This revival aligns with the views of current Fed Chairman Kevin Warsh, who has shown openness to monetarist ideas. Miran’s paper, more policy directive than academic treatise, arrives at a time when the Fed’s stance could realistically shift, impacting not only traditional markets but also stablecoins and broader digital asset sectors, which are sensitive to monetary policy changes.

As an example of the scale, M2 money supply grew by over 10% during the pandemic stimulus phase, signaling excessive monetary expansion according to the paper’s analysis. This quantitative detail illustrates why monetarism’s comeback could steer future Fed moves and influence crypto market dynamics, potentially reshaping how policymakers and investors approach inflation risks and digital currencies.

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