I've weighed in a few times on this but it bears mentioning again. This graph is presented strictly without context. Inflation is a function of both money supply and velocity. The M1 velocity graph is basically the mirror image of the M1 supply graph. [1]<p>US domestic savings rates are near all-time highs. [2]<p>The money supply was expanded in order to offset the drop in velocity from Americans putting their money into savings accounts and into the stock market - risking a deflationary spiral. The Fed has tools available at its disposal to contract the supply should velocity go up in order to meet its goal of a steady 2% rate of inflation. [4] They have admitted it may be transiently higher than 2% as the economy re-opens but their goal is an average of 2%, not to avoid spikes. Spikes historically are normal and common.<p>[edit] A good way to conceptualize this is if the Fed printed a $1T coin and gave it to me, then I threw it into a vault and didn't spend it, would that impact the prices in the CPI basket? No, because the supply expanded and the velocity contracted commensurately. This is what's happening around America on a smaller scale as COVID spooked folks into saving. More about the relationship between supply and velocity and inflation here. [3]<p>The "inflation scare" people are talking about now isn't whether there's already secret inflation we're not talking about (although it does come up, it's more of a fringe idea). Rather, whether the Fed's tools to reduce supply are sufficient to offset a big increase in velocity now and moving forward.<p>[1] <a href="https://fred.stlouisfed.org/series/M1V" rel="nofollow">https://fred.stlouisfed.org/series/M1V</a><p>[2] <a href="https://fred.stlouisfed.org/series/PSAVERT" rel="nofollow">https://fred.stlouisfed.org/series/PSAVERT</a><p>[3] <a href="https://seekingalpha.com/article/4411210-money-supply-mystery" rel="nofollow">https://seekingalpha.com/article/4411210-money-supply-myster...</a><p>[4] <a href="https://fred.stlouisfed.org/series/FPCPITOTLZGUSA" rel="nofollow">https://fred.stlouisfed.org/series/FPCPITOTLZGUSA</a>