Printing money dilutes it’s value. More money chasing the same quantity of goods and service drive up their prices.
Uh, too much money chasing too few goods?
WORK PRODUCT
When you take money from someone and give it to someone else to spend (which is exactly what government spending is) there is no WORK PRODUCT the person receives for his money.
So the second person get to spend that money (he didn’t earn) on the same amount of existing goods. So, more money chasing fewer products = price increase.
Anything the government does to disturb supply and demand breaks everything.
It’s easy, for this case. If you have a static supply of goods, but print a bunch of extra money and hand it out to people to buy those goods, they’ll bid up the prices...hence inflation.
Government gets the money to spend either from raising taxes (thus taking money that would otherwise be going to the private sector) or by issuing debt. Where does it get the money to issue new debts? Oh, well you see the Treasury just creates it out of thin air. Thus there is YET MORE money chasing the same amount of goods in the economy. The result is inflation.
The government sent tons of money directly to the public. CARES Act. Son of CARES etc. Direct stimulus payments, PPP loans, huge unemployment payments.
The purchasing of power of existing dollars declines in proportion to new money created in excess of the production.
A fixed amount of goods is balanced by a fixed amount of money.
By increasing the money supply the value of each unit of money is made less valuable compared to the number of goods, which has remained the same. So it takes more money to purchase the same amount of goods because the money has become less valuable.
Is that you Janet?
Why governments like inflation...
Thomas Sowell
@ThomasSowell
Inflation is in effect a hidden tax. The money that people have saved is robbed of part of its purchasing power, which is quietly transferred to the government that issues new money.
8:39 AM · Jun 10, 2022
The more you allow something, in this case dollars, to flood the market the value goes down. When the dollar goes down in value, it’s called inflation.
If I give you $1 million for nothing and you go to an auction (the free market) to buy things, you would be willing to pay more for the things at that auction.
Your action just increased the price of things for others.
Regulation is not production. Nothing is being produced. Swarms of officers is not a product.
I’ve always wondered how the extra money that’s printed gets into circulation. They print the money, and then what? Do they hand it out to banks? Do they absorb it into the government’s funds, and feed it into the economy by spending it?
It doesn’t have to.
If the dollars are removed from the economy by taxation then inflation will not result.
So, the real culprit is deficit spending where money is created out of thin air and results in increased demand.
Democrat 101: They assume people are gullible stupid, and they often are right.
The government cannot spend what it does not have. So, it must print trillions of more money without backing of real capital. More dollars chasing fewer goods causes inflation.
I knew we were in big trouble when the gubmint was handing out more money to the unemployed than they could earn working. Why put out the effort to work when getting “free” money paid better?