3 ms·
> if you were to look at the extreme and print a ton of money and have zero usage there would no inflation That sounds correct, under the assumptions of classi
by ahepp 6y ago
> if you were to look at the extreme and print a ton of money and have zero usage there would no inflation
That sounds correct, under the assumptions of classical economics.
Inflation is the cost of things going up. Classically, price is considered an equilibrium of supply and demand. If I print money, but don't use it to demand goods, why would the price of goods change?
Reality is more complex than classical economics (and I should note, I'm not an economist). Expectations of inflation (due to say, seeing a giant pile of cash coming off the printing press) can trigger prices to rise.
But hopefully that helps to explain why it's generally accepted that velocity plays an important role in inflation, not simply supply of money.