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At a very basic level, more monies in circulation means each individual money is worth less than before. If each individual money is worth less than before, you
by Dalewyn 4y ago
At a very basic level, more monies in circulation means each individual money is worth less than before. If each individual money is worth less than before, you need more monies to buy something. This is fine if you have more monies on hand to compensate, but generally this isn't the case for individual persons.
Thus, you have inflation: The price of goods inflate(!) because the value of monies drops inversely to the monies in circulation.
- lxgr 4y agoYour model is missing money velocity. Creating money does not automatically cause it to circulate, as the ECB and others have demonstrated between 2008 and 2022.
- Dalewyn 4y agoWhat part of "very basic" do you not understand? If we want to get deep into the thickets of finances we absolutely can, but that's not what I'm here for.