While printing money doesn't create value by itself, not printing enough really puts the economy into a gridlock. I tried to give an intuitive explanation here:

While printing money doesn't create value by itself, not printing enough really puts the economy into a gridlock. I tried to give an intuitive explanation here: "Imagine an isolated village where people farm for subsistence. This is a village disconnected from the world that has not had a currency up to now. People rely on barter instead. Every fall, villagers usually produce excess food to have something to eat in the winter, even if, the real returns on the investment is low. Because of spoilage, crops stored for the winter are only worth 90% of their usual real value. 10% rot away in storage. That is, these crops have a return of negative 10%. One day, this village mandates its government to create a currency that always keeps 98% of its real value on a yearly basis (2% inflation) even during times when private savings assets can’t retain this much. The government puts money into circulation by buying part of farmer’s crop during the summer (civil servants have to to eat). Most farmers produce enough food for the summer, sell some of their crop and keep their money to be able to buy something to eat in the winter. They do not produce a crop to store for the winter since it would only return -10% on their initial investment and the central bank promised money would keep value at a rate of at least -2% (plus maybe a bit of interests). What happens when winter comes? People have cash but few have anything to sell because they didn’t reinvest in the production of a crop to be stored! In this situation, it’s going to be very difficult for the government to control inflation because there will be too few goods for the amount of money people will want to spend. If the government does manage to control inflation, it will be through high taxes or by depressing the nominal value of the crops of the few farmers who did store something for the winter. The central bank might do this by giving high enough interests payments on cash to prevent people from wanting to spend it immediately. In any case, people won’t eat much during the winter because the food will simply not exist. The point is, government money can easily jam markets and crowd out productive investment." https://medium.com/@b.essiambre/the-world-deserves-a-pay-raise-302f25efd82a?source=friends_link&sk=cb180b2cf186b263b6c6c70ad29bc36e https://medium.com/@b.essiambre/the-world-deserves-a-pay-rai...