Inflation Money Supply Debate

so if they make more money (vast incrase in money supply) does not lead to inflation? (not anymore?, what's changed?)

No, it is not. Inflation causes purchasing power to drop. An increased money supply is necessary, but not sufficient. You also need velocity:The equation for inflation is: M x V = P x QEveryone talks about "printing money" (money supply: M) with the Fed, but no one seems to pay attention to velocity (V). Which has dropped off a cliff:* https://fred.stlouisfed.org/series&#x

You're describing money supply, not inflation. Inflation is a change in purchasing power of a unit of currency, not the supply of the currency. The supply may influence its purchasing power but there's a lot more to it, obviously.

The $15k is being transferred from entity A to entity B. Both entities are not spending the $15k so there wouldn't be any effect on inflation. If you printed an extra $15k then that would cause inflation because both entity A and entity B would be spending $15k.Inflation, which means a steady rise in prices overall, happens only when the total money supply in an economy grows. This increase in money, often called "printing money," can be physical cash or digital money created t

There is no such thing as inflation free money. Whatever you use the money on will see inflated prices. Governments and central banks decided to exclusively use the newly created money supply on assets even when those assets are already overpriced.Inflation is merely what happens when demand exceeds supply. When people talk about inflation they do not just mean the increase in money supply but they actually talk about consumer inflation which is indexed through a basket of consumer goods. The

Inflating the money supply wouldn't do what you describe. It would just make everything more expensive.

Inflation (money printing) is the cause of increased demand in goods, not the result of supply problems. If the government sends checks of money to people, they will compete for the same amount of produced goods, and realize that they have to spend the money faster if they want it to preserve its value better.

Milton Friedman> Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output... A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society.Increasing

No. You’ve increased demand. Inflation refers to price level, not money supply.

That is a bit of an oversimplification. The presence of money is no sufficient, that money must be in circulation. For example, they can print all the money they want, if they just toss it all in a big bank account and never remove it, there will be no inflation.That was a big reason why printing a lot of money in the past did not contribute to a lot of inflation: most of that money ended up sitting in the accounts of a few big institutions, who then did not end up spending it on anything.