Do note the postscript below the graph - in May 2020, they changed how the M1 is calculated, adding all of the savings accounts into it. That explains the giant jump.
Is the Fed printing money? Yes. Is it dire? Unknown.
M2 is a better chart now since they added savings accounts in May 2020 making the M1 misleading and hard to follow.
M2 is "M1 plus savings and time deposits, certificates of deposits, and money market funds".
Washington post has a good article talking about the cases for and against inflation rising [1]. This chart shows one case for inflation, cases against include supply chain problems, unemployment, and cautious households.
[1]https://www.washingtonpost.com/business/with-no-inflation-in...
Lies, damn lies, ...
It's not as bad as that graph makes it look.
Last April, all the money that was in savings and money market accounts seemingly got transferred to the m1.
"...the modification of Regulation D in late April has effectively rendered savings accounts almost indistinguishable from checking accounts from the perspective of depositors and banks. Accordingly, the composition of M2 between M1 and non-M1 components conveys little economic information."
https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...
Yes, once you understand what caused the spike, spreading this graph without the explanation is basically misleading propaganda.
with a Federal Reserve Digital Dollar, at least under one proposal, the Fed could, as a matter of monetary policy, just create new dollars directly into everyone's personal Federal Reserve account. Most of the money they created here is still just sitting in big banks and isn't moving around so it does not really add to the velocity of money. If they could hand out all the new money to everyone with like a federal venmo app with USD stable coins that you can convert to cash at an ATM, then maybe they would have another lever to try to meet their 2% inflation goal.
Two graphs of different things stitched together as if they were one.
This is fine.
I've weighed in a few times on this but it bears mentioning again. This graph is presented strictly without context. Inflation is a function of both money supply and velocity. The M1 velocity graph is basically the mirror image of the M1 supply graph. [1]
US domestic savings rates are near all-time highs. [2]
The money supply was expanded in order to offset the drop in velocity from Americans putting their money into savings accounts and into the stock market - risking a deflationary spiral. The Fed has tools available at its disposal to contract the supply should velocity go up in order to meet its goal of a steady 2% rate of inflation. [4] They have admitted it may be transiently higher than 2% as the economy re-opens but their goal is an average of 2%, not to avoid spikes. Spikes historically are normal and common.
[edit] A good way to conceptualize this is if the Fed printed a $1T coin and gave it to me, then I threw it into a vault and didn't spend it, would that impact the prices in the CPI basket? No, because the supply expanded and the velocity contracted commensurately. This is what's happening around America on a smaller scale as COVID spooked folks into saving. More about the relationship between supply and velocity and inflation here. [3]
The "inflation scare" people are talking about now isn't whether there's already secret inflation we're not talking about (although it does come up, it's more of a fringe idea). Rather, whether the Fed's tools to reduce supply are sufficient to offset a big increase in velocity now and moving forward.
[1] https://fred.stlouisfed.org/series/M1V
[2] https://fred.stlouisfed.org/series/PSAVERT
[3] https://seekingalpha.com/article/4411210-money-supply-myster...
[4] https://fred.stlouisfed.org/series/FPCPITOTLZGUSA