what this huge spike in the money supply economy means?

Question

https://fred.stlouisfed.org/series/M1

In: Economics

Answer 1

M1 is the amount of cash circulating in the economy. Actually it’s cash plus checking accounts and some other things. It shot up because of the stimulus checks and the pandemic in general. The implication is inflation because now you’ve got a larger amount of money chasing around the same amount of stuff.