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For many months now I have heard claims on the internet and radio that some large fraction of USD "in existence" were printed since 2020. The percentage ranges between 40 and 80%.

These were found with a quick Google search. Other claims are not linkable as they were in my news feed or radio waves.

Some claims cite the US Federal Reserve "M1" Statistic, which indeed shows a roughly 5-fold increase in value between early 2020 and now. There is a footnote below the graph that explains a change in the definition of M1:

Before May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other checkable deposits (OCDs), consisting of negotiable order of withdrawal, or NOW, and automatic transfer service, or ATS, accounts at depository institutions, share draft accounts at credit unions, and demand deposits at thrift institutions.

Beginning May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other liquid deposits, consisting of OCDs and savings deposits (including money market deposit accounts). Seasonally adjusted M1 is constructed by summing currency, demand deposits, and OCDs (before May 2020) or other liquid deposits (beginning May 2020), each seasonally adjusted separately.

Additionally there is a blog post from the FRED about the change. Being a person who is not knowledgeable about economics, I doubt my readings of these terminology-heavy documents.

Are these "40-80% printed recently" statements truthful?

  • If the claims are false or misleading, in what way?
    • Assuming they are referring to M1, are they defining it incorrectly? Is M1 not the amount of USD "in existence"?
    • Are they using "existence" or "dollars" in an obscure/imprecise way?
  • Are these changes normal and not cause for concern?

"Printed" is being interpreted in a few ways. Let me explain my motivation behind asking this question, so we can reach consensus on the best definition of "printed":

  1. I want to begin to understand the effect of such a change being claimed, if one occurred/is occurring.
  2. Knowing the effect, whether or not it occurred, would give insight into the motivations of those making the linked claims.

Answering those questions is outside the scope of this question. If one shared such motivations, what is the best definition of "printed"? To me, I suggest making no distinction between digital and physical USD. M1 and M0 appear to include physical and digital money, for example.

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    What is wrong with the medium article which gives an explanation and also not M1 is not just dollar bills
    – mmmmmm
    Mar 7 at 18:25
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    The article pointed to by your first link answers the question. It links to the Federal Reserve that says $146m of currency was printed in 2020. Nowhere near the 20trillion that the other articles claim. You are going to have to be clearer about what you are asking if that doesn't answer your question. Mar 7 at 20:02
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    The discrepancy here might be between "new" currency versus currency printed to replace existing currency. Paper money doesn't last too long in normal use, although these days credit cards are giving it a little rest. Mar 7 at 22:00
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    The life expectancy of a dollar bill is only about three years.
    – Mark
    Mar 8 at 4:40
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    They also destroy currency, so the net is probably more economically important.
    – fredsbend
    Mar 8 at 19:20

2 Answers 2

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The sensationalist claims you are seeing are from people who are either ignorant of economics (even at a fairly basic level) or are deliberately trying to mislead you.

Let's consider some of the wide variety of vague claims being made.

Were 40%-80% of actual physical US currency bills printed in 2020?

No they were not. The first article in the question links to the Federal Reserve site which tells us that the printing of banknotes in 2020 amounted to 5,168M notes with a value of $146,374M. Approximately $1.8T currency was in circulation in January 2020 (a value which didn't change much during the year) so it printed about 8% of the currency. An approximately equal amount of currency was destroyed.

Did the money supply increase by 40-80% in 2020?

The money supply is a measure of the amount of US$ circulating and available - not just physical cash but amounts held in bank accounts, investments, etc. The most usual measure of money supply is something called M1, which you can look up. That is the chart you are looking at, which shows a steep upward rise in 2020. A deliberate increase in the money supply is sometimes called "printing money", although no physical money is usually involved.

The reason for the sharp upturn in M1 in 2020 is that the measure was redefined in May 2020. Several kinds of deposit that weren't included before are included now. That explains the sharp increase. It's as though your local government required you to list your house square footage excluding basement, and then decided to change to including the basement. Because your house's measured square footage goes from 2000ft2 to 3000ft2 doesn't mean your house got bigger - it just means your 1000ft2 basement wasn't included before and now it is. It's the same with M1 - some money wasn't included before and now it is.

The Medium article is very good about the non-effects of this non-change, and explains how even if there were some changes the effects would be small.

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    This answer accounts for the vertical at Apr/May 2020 on the M1 graph, but not the (much steeper than before) increase that happened after it and looks still ongoing.
    – Izkata
    Mar 9 at 14:54
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    @Izkata Because that rise was about 25%, not 40%. Mar 9 at 14:57
  • Yup, I see it, I read your question wrong
    – TsSkTo
    Mar 10 at 18:54
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Did the money supply increase by 40-80% in 2020?

Yes.

It didn't increase by 425%, as you might think by looking at the M1 data (as DJClayworth points out in their answer, the jump there is due to a change in the definition of M1), but if you look at Monetary Base, which measures the supply of liquid money (circulating currency and bank reserves, which is a subset of M1: a smaller subset since 2020 than it used to be), and which didn't undergo such a redefinition, it increased by 52%, from 3.442 trillion in January 2020, to 5.248 trillion in January 2021. This is due directly to money creation during that year.

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    @VGR I think the exact definition of "printed" is part of the question. Those circulating the claim seem themselves confused about which definition they're talking about. Mar 9 at 22:00
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    @VGR "printing money" ever more is just a way of saying "creating money", most of which is done purely digitally. As the percentage of coinage (including paper money) of the total money supply continues to drop, that will only get to be more so. And yes, I remember when money was coined, yet nobody seems to wonder if the amount of coined money is increasing...
    – jwenting
    Mar 10 at 13:33
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    M0 is a very narrow definition of money supply, and is not usually considered significant by economists. Mar 10 at 16:00
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    @VGR The amount of money that is physically printed doesn't really matter so I think it's fair to assume we mean something like "money in circulation" which this answer does address, just not in isolation.
    – JimmyJames
    Mar 10 at 16:31
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    You say yes that "the money supply increase by 40-80% in 2020", but the question is whether "some large fraction of USD "in existence" were printed since 2020. The percentage ranges between 40 and 80%". Those are entirely different things. If the money supply increased by 52% in 2020, then only 34% (.52/1.52) of it was created in 2020. It would require an increase of at least 67% just to hit the bottom of the 40-80% range. Mar 11 at 13:42

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