To keep high inflation from eroding the value of money, monetary authorities in the united states control the supply of money in the economy.
The money supply in macroeconomics refers to the total volume of currency owned by the public at a certain point in time. There are various ways to describe "money," but the most common are currency in circulation and demand deposits.
The Fed can expand the money supply by decreasing bank reserve requirements, allowing banks to lend more money. In contrast, by increasing bank reserve requirements, the Fed can reduce the quantity of the money supply.
Our country's current monetary policy is expansionary, which implies that the money supply is artificially increased and interest rates are near zero. As a result, the growth rate of all dollars in circulation ("M2 Money Supply") reached a new high of 27% in 2020-2021.
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