You have to look at stocks and flows together. M1 is the stock of money. But if that money doesn't flow, then it doesn't drive economic activity. Here's the

You have to look at stocks and flows together. M1 is the stock of money. But if that money doesn't flow, then it doesn't drive economic activity. Here's the velocity of M1 -- it falls off a cliff in 2009 and continues falling to the present day. https://fred.stlouisfed.org/series/M1V https://fred.stlouisfed.org/series/M1V If velocity held constant as the money supply increased, then you'd have a very good point. You can flood the system with liquidity, but if nobody spends it, then it makes no difference. I believe this is what economists call "pushing on a string".