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%.
- Is it a big deal that 40% of USD was printed in the last 12 months? NO, it’s not.
- 80% of all dollars in existence were created in the last two years.
- If 35-80% of US dollars were printed in 2020, why is inflation ‘only’ at 6.8%?
- Since January 2020 the US has printed nearly 80% of all US dollars in existence. $4.0192 Trillion at the start of 2020, October 2021 $20.0831 Trillion
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":
- I want to begin to understand the effect of such a change being claimed, if one occurred/is occurring.
- 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.