There are two ways to measure how fast your dollar is losing value. One is CPI — the Consumer Price Index — published monthly by the Bureau of Labor Statistics. The other is M2 — the money supply — published weekly by the Federal Reserve. They tell very different stories, and the gap between them is the number that affects your life most directly.
How CPI is calculated
CPI tracks the price of a "basket" of roughly 80,000 goods and services across 75 urban areas. BLS field representatives physically visit stores and record prices. The index is weighted by how much of each category the average consumer spends on: shelter (36%), food (13%), transportation (16%), medical care (7%), and so on.
On the surface, this sounds rigorous. But the methodology includes several adjustments that systematically lower the reported number. Substitution assumes that when beef gets expensive, you switch to chicken — so the basket changes instead of the price rising. Hedonic adjustment reduces the reported price of goods that have "improved in quality," even if the sticker price went up. Your new laptop costs $1,200 like the old one, but CPI says it's "cheaper" because it's faster.
What CPI misses
CPI doesn't include asset prices. The cost of housing is measured through "owners' equivalent rent" — an estimate of what homeowners would pay to rent their own homes — rather than actual home prices. In a market where median home prices have risen over 40% since 2020, this substitution dramatically understates the cost of putting a roof over your head.
CPI also doesn't capture the quality reduction that companies use as a stealth price increase. Smaller package sizes at the same price, thinner materials, reduced customer service, fewer staff at the same restaurant — these are all real cost increases to you that CPI doesn't register.
Why M2 tells a different story
M2 measures the cause rather than the effect. When the Federal Reserve and the banking system create more dollars, those dollars dilute the purchasing power of every existing dollar. M2 doesn't rely on basket selection, substitution assumptions, or quality adjustments. It measures one thing: how many dollars exist. When that number goes up faster than economic output, the purchasing power of each dollar goes down. The math is direct.
Since 2020, M2 has grown from $15.4 trillion to $22.44 trillion — a 46% increase. Over the same period, CPI reported cumulative inflation of roughly 21%. That 25-point gap is real. You felt it even if the official statistics didn't fully capture it.
The Debase Score tracks this gap daily. When M2 grows at 3.9% and CPI reports 2.8%, the Debase Score is 1.1% — the erosion that's happening but isn't being officially reported. This is the number that determines whether your raise was real or an illusion.
Which one should you trust?
Neither number is lying. They measure different things. CPI measures a specific, curated view of consumer prices with built-in adjustments. M2 measures the raw dilution of the currency. For understanding government policy and economic trends, CPI has its place. For understanding what's happening to your paycheck and your savings, M2 is more direct.
The Debase Brief publishes both numbers every morning alongside the gap between them, so you can make your own judgment with real data. Check what your salary is actually worth after accounting for both measures.