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Last Post: 10:27:03am, 03/02/2023
ROOTFayth posted...
isnt all new money inevitably into circulation at some point though, whether you create stuff with it doesnt change the entirety of the supply, if you look at graphs money has been devalueing year after year, so what are we doing wrong, not creating enough?
The thing is that there needs to be new money to keep up with the economic production. If you produce more value and the monetary supply doesn't expand, the value of a dollar increases and you have deflation. If you don't produce enough value and the monetary supply expands faster, you have inflation, where the value of an inspanidual dollar is reduced - you need more money for a given good than you used to.
That's what we saw during the pandemic. A whole lot of cheap money (low interest loans) entered the market with nothing being produced to balance it out, hence inflation.
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