[rojeee]

M1 can _only_ be held by commercial banks. The banks _only_ use this money to settle transactions between themselves and as eligible reserves. The money isn't used to buy stocks or bonds or whatever. The purpose of an increase in M1 money supply is to incentivise the commercial banks to lend more.

It's not the case that some person has more money because M1 has gone up! Instead, what happens is that as the banks are more willing to lend, people will be able to get credit easier, so more people borrow and that's how money that you and I can use (I assume hardly anyone uses notes and coins anymore) enters the economy. If the banks don't lend because there is no demand for credit, then the increase in M1 has little to no impact on the aggregate money supply. You can see that M1 increased by 25% over the year. Bank deposits only increased by 15% over the year, implying that the increase in M1 didn't have as much as an effect on bank credit as you might imagine.