What is the money multiplier in the US?

United States – M1 Money Multiplier was 1.19700 Ratio in December of 2019, according to the United States Federal Reserve. Historically, United States – M1 Money Multiplier reached a record high of 3.13100 in January of 1987 and a record low of 0.67700 in August of 2014.Click to see full answer. Similarly, you may ask, what is meant by the money multiplier?The money multiplier is the amount of money that banks generate with each dollar of reserves. Reserves is the amount of deposits that the Federal Reserve requires banks to hold and not lend. The money multiplier is the ratio of deposits to reserves in the banking system.Subsequently, question is, why is the money multiplier overstated? Banks can use their remaining deposits for loans. Doing so multiplies the amount of money in circulation. Economists keep a close eye on the money multiplier to prevent inflation. However, the money multiplier can be overstated because it does not account for excess reserves. Consequently, is the money multiplier real? The actual ratio of money to central bank money, also called the money multiplier, is lower because some funds are held by the non-bank public as currency. Also, in the United States most banks hold excess reserves (reserves above the amount required by the US central bank, the Federal Reserve).What is the other name of money multiplier?Deposit Multiplier. The deposit multiplier, also known as the deposit expansion multiplier, is the basic money supply creation process that is determined by the fractional reserve banking system. Banks create what is termed checkable deposits as they loan out their reserves.