> which will be expanded by about 8.5x by fractional reserve banking.

Didn't they remove all reserve requirements back on March 15? I thought a 0 requirement would cause a bigger than 8.5X multiple with enough time (all else equal).

They did exactly that.

I understand M1 includes the most liquid portions of the money supply in circulation. When the Fed "prints" money I don't think they are talking about physical money.

Can someone explain what this graph tells us?

"The money supply measures reflect the different degrees of liquidity—or spendability—that different types of money have. The narrowest measure, M1, is restricted to the most liquid forms of money; it consists of currency in the hands of the public; travelers checks; demand deposits, and other deposits against which checks can be written. M2 includes M1, plus savings accounts, time deposits of under $100,000, and balances in retail money market mutual funds."

From the Fed itself:

https://www.newyorkfed.org/aboutthefed/fedpoint/fed49.html

The money is physical in the sense that people are able to extract value from it. It is given to a bank to loan out, essentially for free, and they are able to keep the interest.

So if you're a bank you basically are given free money by the government.