Topic: How to explain that the dollar printing causes the inflation? (Read 157 times)

Ahh.. well, inflation is often called the tax of the bad governments. While not being properly a tax, inflation is based on a monetary effect, but it is also linked to the rest of the world. Let me see if I can do the six year old explanation to this one:

You produce apples. dumBAss also produces apples.

You have 1000 USD and 1000 apples this year, so your apples cost 1 USD per each.

dumBAss does the same, he uses BAcoins and has 1000, so apples are 1 BAcoin.

The exchange rate is 1 BAcoin = 1 USD as both buy you 1 apple.

Hoewever you are far smarter than dumBAss (not surprising), so you manage to increate the productivity of your economy and, with the same effort, you now produce 2000 apples. Salaries remain stable, so your citizens now have twice the number of apples to eat.

Your economy is much better than the one in BAland (not surprising), so you can now sell apples at 50 cents. The poor citizens of BAland now can buy an apple for 1 BAcoin or for 50 cents. So now the exchange rate is 1 BAcoin = 0.50 USD.

dumBAss is now worried. While he was immersed in his Biblical studies (of the wrong short), your apple industry is much cheaper than the one in BAland so he asks his friend Trump for advice and Trump says "make BAland great againg by puting import taxes".

dumBAss puts a 100% tax on apples, so now your apples sell in BAland at 1 USD.

Thus, the citizens of BAland now pay DOUBLE than your citizens for the same apple. That is what I would call a hidden tax. Not very well hidden, but hidden.

The coin of your country is stronger, it buys you 2 apples, a BAcoin buys only one. Do that a few times and BAcoin will be worthless due to inflation.

Calling inflation a tax is true but the benefactor and the taxed are not immediately obvious. There is a complex benefit curve, but clearly most of the benefit of a newly instantiated dollar that didn't exist before, which are called "printed dollars", go to the first recipient. A much more minor benefit goes to the second recipient. This increase in supply of dollars necessarily, by the laws of economics, mean the price per unit in terms of things that dollar buys goes down. I think someone can understand that if the supply of food were to suddenly double that food prices could be expected to be drop a lot. Well if the supply of dollars were to suddenly double then the price of the dollar which is measured in terms of what it buys can be expected to drop a lot. So the fundamental educational awareness in understanding inflation is understanding that what a dollar buys as its price can be measured in how much you can buy with it, especially for staple commodities like lumber. The people paying who are disadvantaged and therefore taxed by the inflation are those paying the higher prices. Whether or not it is a direct tax, it is at least an indirect tax. And of course even if it doesn't meet one's legal definition of tax it at least meets the dictionary definition of tax as a burden on people.

1. Governments borrow money to spend more money.

2. The money is printed.

3. The money supply increases.

4. Supply & demand always pressure to balance.

5. Therefore, price inflation happens as that balance happens.

An interesting sentence from your conversation is “inflation is a hidden tax” maybe you can consider it yes, but it is not like that in the mechanism of taxation and inflation, Inflation as mentioned by @paxmao is quite correct in answering the question, but inflation is not a tax that is your obligation as a citizen to pay, it has nothing to do with inflation, even though our money has decreased in value.

A bit of name calling, a bit of "you do not understand" and a link to you favourite dis-information site. There is nothing short of a debate, proof or argument as usual. You expect the reader to believe you out of the blue.

Banks have certainly quite a bit of mud in their accounts, but it is nothing like what you describe, it is much more about all the illegal or government illegally or secret backed trades. Bank accounts are audited and since 2008 they have even bigger restrictions and controls on what they can do with the money. If there is fraud well... you enter the realm of getting caught vs not, etc...

Nobody is screwing the borrower. You get money, you re-pay plus interest. That's it. The bank makes profits because they can lend more than they actually have, but again, that is not a secret to the point that is in nearly any economy book on the matter, you do not even have to look for it.

On "promisory notes" used as cash balance to lend... that is not how it works. The banks need to keep it liquid.

https://token.kitchen/1/fractional-reserve-banking-money-as-debt

Okey but then why the birth rate in rich countries like Japan, South Korea and even in the United States continue to shrink while in empovished nations within central Africa the birth rates continue to be stable or increasing. Actually, there have been some studies done before to find the relation between income, quality of life and the rate of births in different countries around the world and the results seem to to point out there are always more children within a family when the couple lives in a developing country, where there is less money and less opportunities.
That is a direct contradiction to that economical and societal theory you are talking about, isn't it?

Otherwise, the population within the African continent would have supposed to minimize while more successful countries in Europe and Asia would have maximized their birth rates. The opposite is happening. More money and more opportunities to study translates to less children.

How to explain that the dollar printing causes the inflation?

easy
when there are 1000 coins in a jar on a table and 10 people around the table, they will all want 100 coins each, so price their goods to get that target
when they see someone add another 500 coins into the jar.. now they want 150 each so increase their prices of goods to get new target

..
whenever there is more money in circulation/a community, businesses will then set their prices according to a fair amount of the money in circulation

this is why even if you take a certain brand of goods, you see them put a premium on their prices in wealthy regions, because they know there is more money floating around in that region.

You don't seem to understand. That's not pro-Putin. It's anti-theft.

Inflation steals from average people who use that kind of money. In the US, the banking system causes the inflation. If people don't wake up to this fact, they will be conquered by the banking system. It doesn't have anything to do with Putin, except that he and many other nations recognize the banking theft of the US banking system.

When Russia uses the USDollar, they automatically lose to the US banking system. Same with China, India, Pakistan, any South American country, and all Americans in the US. Many countries have figured this out. Mostly, it's the American people who haven't figured it out, yet. At least not formally in big numbers of them.

The OP 'science talk' is part of what the banks use to cover this up. And people don't even realize it.

Dude, you're debating NPCs.

 I don't know if you know this, but standard dogma in university economics departments is that "deflation is worse than inflation, deflation caused the Great Depression".  Of course, this true... for the wealthy.  For working folks, it's the complete opposite. 

I see that you have pro-putin political views. Can you look at this video, please?

https://youtu.be/q07dm6lPs2k

And they do it when the US and NATO don't send enough money to Ukraine. That's why Ukraine can build nukes without the help of the US and NATO, if they want.

You want to say that the quantitative tightening is like hiding money? And those who control the money (the Fed, the financial aristocracy) have the ability to unpack this hidden money at some moment, in particular to maintain their political power?

I mean, that the inflation means the increase of the prices of services. Also, I mean the Briffault's law: resources like money give the men the possibilities to build relationships with women. The Briffault's law comprehensively describes how the society works - in particular, how the power gives the possibility for a men to have more women and more children. In the class societies of the past, men in upper classes always had more possibilities to have sex and so on.

Exactly! You are finally understanding a little. However, bank CPA's DO promise to not reveal what is in the bank ledgers that they validate.

Of course the system works that way. It's designed to screw so-called borrowers along with the rest of the people who use the money system that the bank uses. However, depositing a promissory note like it was a money order or a check - or cash - is unconscionable. There might not be anything wrong with it if the bank simply did the trade, promissory note for bank check, or whatever. But they don't admit the trade. They hide it, and make it look like the so-called borrower actually borrowed something from them.

I guess I made a mistake after all. The "exactly" that I started this post out with was wrong. You don't seem to understand anything about the way the banking system works. Of course, it's to be expected from you.

A bank trick and lie as the banks walk off with all the money they have stolen over the years...
BREAKING: Federal Regulators Are Preparing For Massive US Bank Failures As 750 Billion In Losses Is Now Due - https://freeworldnews.tv/watch?id=672409d26d3d9c5888caa639

Robert Breedlove: Philosophy of Bitcoin from First Principles | Lex Fridman Podcast #176

There is nothing secret about what banks do on that regard dumBAss, there is no oath of secret on how a bank works in a fractional deposit system.

What you call "free money" is simply the way the system works by allowing banks to lend more than they have in deposit, it is not that difficult to understand and there is no "double payment". They percent they have to keep in reserve in their accounts in the central banks is regulated.

What you call "promisory note" is probably a loan and you do not "fund your loan with your loan". The deposits in the bank fund a fraction of the loan.

Could you you please explain to me what do prostitutes have to do with real state and gold?. Why is the circulation of money supposed to be based of those goods and services which are not completely vital for the development of a society (with the exception of real state).
Why does prostitution have to do with macroeconomics decisions on whether the government is supposed to issue more money or not? If prostitutes start to increase the price of their services then is the federal reserve supposed to "burn" more money in order for the average price or value of prostitution stay stable?

It is the first time I have ever heard about such economical ideas.

Also, Fiat is supposed to be a representation of both the trust people have in the issuing nation and the wealth created by the same nation in a specific period of time, if wealth creation  goes slower than money printing of money then inflation is inevitable, the opposite happening leads to deflation.

Your answer is right here - https://duckduckgo.com/?q=Tom+Schauf%2C+bank+freedom&ia=web.

It is simple. All the banking science is just talk to hide what the banks really do. Find yourself a bank CPA who is willing to break his oath of silence, and tell you what the bank ledgers show. Here is what it is, in brief.

Bank loan officers deposit loan promissory notes into bank accounts just like they were checks or money orders. Then, when the borrower pays off the loan over the years, the bank gets a second big payment, plus interest.

In other words, when you borrow money from a bank, you fund your own loan by your promissory note. The bank gets free money.

The free money ultimately finds its way into the pockets of the owners of the Federal Reserve Bank. They use it to fund the wars that they make worldwide, all for the purpose of stealing property from people worldwide.

The deposited promissory notes are essentially new money. Since the bankers own it, they can print it as they deem necessary. Think of all that new money created when governments borrow $billions. And the people suffer by the inflation caused when it is printed.

This is why BRICS was formed. The nations of the world were getting tired of funding banks that use the money to steal from them. It's the reason for the Ukraine war. The banks don't like being toppled by BRICS.

What is there to understand? You have more money for the same resources, resources rise in price -  as simple as it gets, that's inflation.

You can call it money printing or quatitative easing, there is not that much of a difference, but just in case:

Quatitative tightening is removing money from circulation. Not notes necesarily, also the money that is just a book record in a company or a Bank. To achieve this you have several mechanisms but one of them is to sell bond. The CB sells bonds thus removing the money used to pay these from circulation.

You want to "ease", the you re-buy the bonds and money gets into circulation again.

This is the 6 year old version of it.

So yes, if you'd want to keep prices stable... let's say that you only have apples ok? Now each apple is 1 USD and you have 1000 apples, so you can issue 1000 USD and the apples will not change the price.

You issue 2000 USD and apples will start costing 2 USD (inflation.

Now, your economy improves and now you produce or have 5000 apples. If you do not put more money into circulation each will cost 20 cents. So if you want to keep it stable you'd need to print up to 5000 USD to keep their price at 1 USD.

Simple uh?

I am talking at a science forum with politics section, where the Dem supporters are dominating. I tried to explain them, that the dollar printing is a hidden taxation and at the same time the cause of the inflation. They started denying this statement; firstly they said that there is no such thing as the "dollar printing", instead the term "quantitative easing" should be used. I don't understand the difference between these terms, hope somebody will explain me this. If I am not mistaken, some of the dollars are also "burned" (quantitative tightening), what does this mean?
Then, they said that the quantitative easing produces the inflation not always, but only when the amount of money printed is bigger than the growth of economy. I am sure that this is not true: the inflation should be calculated by the prices of gold, real estate and (sorry) prostitutes, not by the prices of smartphones (which can decrease because of the growth of technology). I suppose, the groцth of bitcoin is a simple and expressive indicator that the fiat currencies are inflating. How can I explain this in economic terms for these people?
And one more question. When I asked them whether the quantitative easing is a hidden taxation, one of them responded:


I don't know what means the term "bonds", so I am asking to help me understand this, and help me to explain this "economist" that he is wrong.