8 ms·
Another important factor here is international currency exchange. For a deeply simplified example: say you printed a bunch of money and handed it to Americans
by mrfredward 6y ago
Another important factor here is international currency exchange.
For a deeply simplified example: say you printed a bunch of money and handed it to Americans who wanted to buy electronics with the money. Factories in China would happily meet the extra demand for 80" TVs, and for their work they'd receive an influx of dollars, which they'd have to change into yuan to pay their workers and buy supplies.
Currency markets are subject to supply and demand of course, so this influx of people trying to exchange out dollars would make the dollar less valuable relative to the yuan. The devaluing of the dollar on international markets would make all imported goods more expensive, ergo inflation.