Recall that there isn't just one measure of how much money is in the country. The Fed uses two measures (and used to use three). M1 is currency in circulation plus money in the banks. It is the most liquid measure of money. M2 is M1 plus savings, CDs, and money market funds. That is money not quite as liquid.
This graph of the money supply over the last 9 years is a logarithmic plot, which means a straight line represents constant growth, say 2% per year, and a big jump is a big deal. Note the increase in M1 toward the end of last year and note the slight increase in M2.
That increase in M1 was the Fed loaning money to the banks and buying up treasury securities while various organs of government doled out rescue money. Most of it has stayed in the banks (M1 rather than M2).
In fact, here's a look at the components of M2 that are not in M1 (savings, CDs, and money funds):
Certificates of deposit and money funds can be considered short-term investments. They have fluctuated in size over the years and have, in fact, decreased in the last 12 months along with many other forms of investment. Any increase in M2 has been in pure savings accounts.
For the last year, M2 has been flat. M1 is still rising, and the Fed is still distributing money, though not like the panic infusion of a year ago. Sooner or later, more of the money supply will make its way into consumer hands and M2. Ben Bernanke, Chairman of the Fed, knows this and says that the Fed will begin reducing the money supply at the right time. Else we get inflation, and lots of it. Let us hope that Chairman Bernanke knows when to begin turning around this money machine he has been driving.
