<p>The Federal Reserve launched a number of emergency lending and asset purchase programs. <a href="https://fred.stlouisfed.org/series/BOGMBASEW" rel="nofollow noreferrer">FRED time series of the monetary base.</a></p>

<p>Since the Fed is purchasing things, it creates deposits for non-bank entities selling those assets.</p>

CC BY-SA 4.0
2020-06-09T18:30:12.510Z
2020-06-09T18:30:12.510Z
Brian Romanchuk
<p>M1 has increased massively during the current pandemic. Below is an image from Fred St. Louis. Similar picture emerges from other countries. </p>

<p><a href="https://i.sstatic.net/r0vVj.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/r0vVj.png" alt="enter image description here"></a></p>

<p>According to <a href="https://www.federalreserve.gov/releases/h6/current/" rel="nofollow noreferrer">Fed data</a>, the increase is due to a rapid increase in <strong>demand deposits</strong>:</p>

<p><a href="https://i.sstatic.net/gzRAy.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/gzRAy.png" alt="enter image description here"></a></p>

<p>These are defined as: </p>

<blockquote>
  <p>Demand deposits at domestically chartered commercial banks, U.S. branches and agencies of foreign banks, and Edge Act corporations (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.</p>
</blockquote>

<ol>
<li>Is this because people are spending less? </li>
<li>But doesn't money people spend goes to companies' current accounts (demand deposits), which they pay their suppliers and employees ino their current accounts, which they pay their esuppliers and employees into their current accounts, and so on? </li>
<li>Is it instead explained by money transfers from the government to individuals as part of covid relief measures? </li>
</ol>

<money-supply><money>
Why has M1 shoot up?
chatGPT
# Why has M1 shoot up?

(Asked by: username_0 on 2020-06-09)

M1 has increased massively during the current pandemic. Below is an image from Fred St. Louis. Similar picture emerges from other countries.

[![enter image description here](https://i.sstatic.net/r0vVj.png)](https://i.sstatic.net/r0vVj.png)

According to [Fed data](https://www.federalreserve.gov/releases/h6/current/), the increase is due to a rapid increase in **demand deposits**:

[![enter image description here](https://i.sstatic.net/gzRAy.png)](https://i.sstatic.net/gzRAy.png)

These are defined as:

> Demand deposits at domestically chartered commercial banks, U.S. branches and agencies of foreign banks, and Edge Act corporations (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.

1. Is this because people are spending less?
2. But doesn't money people spend goes to companies' current accounts (demand deposits), which they pay their suppliers and employees ino their current accounts, which they pay their esuppliers and employees into their current accounts, and so on?
3. Is it instead explained by money transfers from the government to individuals as part of covid relief measures?

**Tags:** money-supply, money


---

## 1 answers

### Answer by username_1 on 2020-06-09. Score: 1

The Federal Reserve launched a number of emergency lending and asset purchase programs. [FRED time series of the monetary base.](https://fred.stlouisfed.org/series/BOGMBASEW)

Since the Fed is purchasing things, it creates deposits for non-bank entities selling those assets.


---

