Why Can't We Just Print More Money to Fix Inflation?

Imagine you and your friends are playing a game where everyone gets 10 dollars to spend on candy. If all of you print more money, suddenly everyone has 20 dollars, but the price of candy goes up because there's too much money around. That’s like money printing in real life. When too many people have too much money at once, everything costs more, that’s called inflation.

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Examples

  1. If you and your friends print extra dollars to buy candy, everyone has more money but the price of candy goes up because there’s not enough.
  2. Printing lots of money without adding new goods is like giving out extra allowances, it makes everything cost more.
  3. Imagine a bakery printing more bread tickets than they have actual loaves, people end up paying more for each loaf.

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Categories: Technology · inflation· money printing· economics· currency· central banking