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> "Velocity" as it's called dropped in 2020, but once trading picks up again what happens to all those dollars?

They go back where they came from.

The Fed giveth, the Fed taketh away.

When deflation and unemployment are the concerns, you get the gas pedal pushed and easy money policies. When inflation is a concern instead, they hit the breal and you get tight money policies.

The surge in M1 was mostly because of an accounting change:

* https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...

(M2 includes M1, IIRC.)

This poster is correct, I’m not sure why the post is gray. The way M1 is calculated changed last year, read the linked article for proof.

No one is disputing that the money supply has increased dramatically.