Some people believe that the amount of money in circulation is what primarily determines the US economy. They hold that decreasing the money supply will stop inflation, which was brought on by the Federal Reserve's recent increase in the money supply. This viewpoint, however, is inaccurate and oversimplified.
One factor that has an impact on the economy is the money supply, but there is little correlation between it and actual economic results. The willingness of both individuals and financial institutions to borrow money is crucial. Money's velocity, or how quickly it moves around, is influenced by the actions of numerous financial intermediaries and their clients
In 2008, the Fed changed its monetary policy, further complicating the relationship between bank reserves and the cost of credit. Because of this, even though the money supply increased significantly during the Fed's quantitative easing programs, inflation didn't spike.
Various factors, such as changes in demand, fiscal stimulus, and low interest rates, contribute to inflation. While quantitative easing helped to boost the economy, its influence on inflation has been overstated. The impact of quantitative tightening on inflation will also be minimal, and short-term interest rates play a bigger role in determining people's propensity to borrow and spend money.
Source: https://www.bloomberg.com/opinion/articles/2023-02-28/money-supply-doesn-t-explain-us-inflation
This article was informative and different. People usually think that the amount of money circulating is what runs the economy like you said but it is the money borrowed. When it is easier to borrow money, rates of consumption and lending (and borrowing) both tend to go up. In the short run, higher rates of consumption and lending and borrowing can be correlated with an increase in the total output of an economy and spending and, presumably, a country's GDP.
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