The year-on-year growth in M2 — a broad measure of US money supply — has rocketed this year due to the efforts of monetary and fiscal policymakers to reduce the economic damage caused by the pandemic. Although the severity of the shock makes deflation the most likely short-term outcome, Mr Wilson argued that there is now a “greater likelihood for inflationary pressures to build”. Source: Financial Times, August 10th, 2020.
What fact in macroeconomics explain deflation being the most likely short-term outcome of an increase in M2? A reference would be appreciated. Thank you.