The money supply “increase” is not happening when you consider the argument below. We are more at risk of deflation than inflation at this time because the increased supply of money is not getting into wages like it did during the Carter years. Until it does inflation is not on the table.
*But what happens if one (or all) of the banks decides it isn’t prudent to loan out the money and they prefer to increase their reserves instead? In that case, the money multiplier falls. In the following chart we can see that the M1 money multiplier has actually fallen steadily from just under 3x in 1990 to 1.5x in 2008 (in contrast to the velocity of money which rose). But in 2008 the money multiplier plummeted to under 1x. What does that mean? Any kid can tell you, if you multiply by 1 you get the same number, no multiplication has happened.
But if you multiply by less than one, you end up with less than you started with! In other words, every dollar the government is pumping into the economy is ending up in the banks and going nowhere! It is not increasing the money supply, it is not multiplying, it is not creating inflation. It is going to boost the balance sheets of the banks. LINK *