The money supply tells us how much physical currency as well as assets so liquid that they are pretty close to the acting physical currency exists in the economy of a country at a certain point of time. This data is usually reported by the country's central bank and the way it is measured can differ from country to country. In the US, for example, the most popular data points are
- Monetary Base
It tells us how much actual currency there is in circulation plus how much banks and depository institutions keep as reserve balances in their accounts at the Federal Reserve. - M1
It tells us how much currency is held by the public as well as how many transaction deposits exist. In other words, accounts and deposits that can be used for transactions immediately. - M2
It is basically M1 plus savings deposits, time deposits under 100K, and money market funds. Each tells us something different.
So, why prices have not gone up, when the Fed is pumping money into the system through quantitative easing. As can be seen, the central bank can indeed increase the monetary base at will, but in our case, it did not control what happened next. If it prints even a 100 trillion, but that money just stays parked, rather find its way into the real economy, prices obviously will not go up. However, it would give each US citizen an equal share of that 100 trillion amount.