The Fed has some $8+ trillion in bonds that they have said they will be selling or allowing to mature without corresponding re-purchases. I believe that process will reduce M2. Looking at the chart of M2, it seems that the Fed has the ability to reduce M2 by about 1/3.
So the Fed does indeed have a lever available to sop up an awful lot of M2.
The Fed can also adjust the reserve requirements at banks to reduce M2. That’s a much bigger hammer to wield, and I suspect it’s unlikely to be put to use unless inflation remains a problem after they’ve used increases in the Fed Funds rate and sold off a fair amount of their bond portfolio.
While I agree with your analysis in general, I’m not too worried about the Fed’s ability to reduce M2 to combat inflation as monetary velocity increases back toward historical norms.
–Peter