# Something I still don't understand about printing money and inflation **URL:** \ **Category:** Factual Questions\ **Created:** [October 26, 2026, 12:43am UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155 "2026-10-26T00:43:09Z")\ **Posts on this page:** 13\ **Page:** 2
**Author:** ![Velocity](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/velocity/32/18006_2.png) [@Velocity](https://boards.straightdope.com/u/Velocity)\ **Post date:** [October 26, 2026, 8:04pm UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155/21 "2026-10-26T20:04:46Z")
In an economics class many years ago, I asked the exact same question as the OP. I don’t know what exactly the professor said, but it was something to the effect of, “Even if you printed the money in secrecy, somehow it would still affect prices anyway.” ---
**Author:** ![robby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robby/32/11048_2.png) [@robby](https://boards.straightdope.com/u/robby)\ **Post date:** [October 26, 2026, 8:31pm UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155/22 "2026-10-26T20:31:12Z")
> [@Velocity](#): > > In an economics class many years ago, I asked the exact same question as the OP. I don’t know what exactly the professor said, but it was something to the effect of, “Even if you printed the money in secrecy, somehow it would still affect prices anyway.” I think it boils down to if the printed money reaches the economy in any way, it tends to cause inflation. ---
**Author:** ![HMS\_Irruncible](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hms_irruncible/32/7394_2.png) [@HMS\_Irruncible](https://boards.straightdope.com/u/HMS_Irruncible)\ **Post date:** [October 26, 2026, 9:00pm UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155/23 "2026-10-26T21:00:15Z")
> [@robby](#): > > I think it boils down to if the printed money reaches the economy in any way, it tends to cause inflation. Yes, if the money ends up in the hands of consumers, then you have more money chasing the same number of goods. Inventory gets cleared out in a hurry, and then stores find they cannot resupply unless they bid higher than other stores. Or, suppliers respond to increased cost in raw material by raising their own prices to protect their own margins. ---
**Author:** ![zimaane](https://avatars.discourse-cdn.com/v4/letter/z/a3d4f5/32.png) [@zimaane](https://boards.straightdope.com/u/zimaane)\ **Post date:** [October 26, 2026, 9:00pm UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155/24 "2026-10-26T21:00:27Z")
Once the money gets in people’s pockets, they are going to go out and spend it. And businesses are going to notice that their goods and services are being sold more quickly, and raise prices accordingly. ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [October 26, 2026, 10:41pm UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155/25 "2026-10-26T22:41:04Z")
Inflation can be caused by any process that destroys the balance between money and goods. When Spain brought massive amounts of silver back from the new world, but didn’t increase its supply of goods the result was also massive inflation. Even though silver is not printed money. Of course a lot of it went to imports from other countries, but only a few people controlled all that silver so the inflation destroyed the economy for the rest. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [October 26, 2026, 10:50pm UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155/26 "2026-10-26T22:50:45Z")
> [@Hari\_Seldon](#): > > When Spain brought massive amounts of silver back from the new world, but didn’t increase its supply of goods the result was also massive inflation. Even though silver is not printed money. Of course a lot of it went to imports from other countries, but only a few people controlled all that silver so the inflation destroyed the economy for the rest. Right. I read one historian explained it as Spain had more _Money_, but not more _Wealth._ ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [October 26, 2026, 10:52pm UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155/27 "2026-10-26T22:52:02Z")
Money is fungible. Any money in any form can be converted into an equal amount of money in any other form. Sounds tautologically basic, but in this example it means that once money is created no one can tell it from all the other money out there. Money therefore cannot be hidden. Hidden money would have no value at all. Money is designed to be spent. If a pallet full of money sits and never is found, then it does exactly nothing to the economy. Money spent in any form does. ---
**Author:** ![robby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robby/32/11048_2.png) [@robby](https://boards.straightdope.com/u/robby)\ **Post date:** [October 26, 2026, 10:57pm UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155/28 "2026-10-26T22:57:14Z")
> [@Hari\_Seldon](#): > > Inflation can be caused by any process that destroys the balance between money and goods. When Spain brought massive amounts of silver back from the new world, but didn’t increase its supply of goods the result was also massive inflation. Even though silver is not printed money. Of course a lot of it went to imports from other countries, but only a few people controlled all that silver so the inflation destroyed the economy for the rest. Right, I almost mentioned that myself, and was reading about it [here](https://en.wikipedia.org/wiki/Price_revolution). Interestingly, the inflation in question was only about 1.2% compounded, which by modern standards is relatively low, but high both for the time and considering the monetary and economic policy in the 16th century. Basically Spain made little or no effort to invest in the country and increase the goods and services produced. Instead they mostly spent the silver on foreign goods and Habsburg war efforts. > **[Price revolution](https://en.wikipedia.org/wiki/Price_revolution)** > > The Price Revolution, sometimes known as the Spanish Price Revolution, was a series of economic events that occurred in the second half of the 16th century, and most specifically linked to the high rate of inflation that occurred during this period across Western Europe. Prices rose on average roughly sixfold over 150 years. This level of inflation amounts to 1.2% per year compounded, a relatively low inflation rate for modern-day standards, but rather high given the monetary policy in place in ... . ---
**Author:** ![Q.Q.Switcheroo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/q.q.switcheroo/32/5713_2.png) [@Q.Q.Switcheroo](https://boards.straightdope.com/u/Q.Q.Switcheroo)\ **Post date:** [October 26, 2026, 11:04pm UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155/29 "2026-10-26T23:04:32Z")
As satirized in _Candide_ when the title character acquires massive quantities of diamonds from El Dorado (where the natives consider them “worthless pebbles”) but ends up impoverished anyway. ---
**Author:** ![Gordon\_G](https://avatars.discourse-cdn.com/v4/letter/g/3da27b/32.png) [@Gordon\_G](https://boards.straightdope.com/u/Gordon_G)\ **Post date:** [October 27, 2026, 4:29am UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155/30 "2026-10-27T04:29:53Z")
Is OP implying that “covert” money creation doesn’t cause inflation while “overt” money creation does? > [@mixdenny](#): > > But a limited amount of money might not cause panic, right? Say the Gummint needs 5 million to repaint the reflecting pool. Print 'er up one night. Pay the man. Who would know or care? What if the contractors building the ball room were paid this way? You are only involving a small number of people. I’m not sure what the argument is about. Small amounts of money are … small. The USG is already spending an extra billion here, billion there for non-productive uses. Friendly banks happily create the new money, if the interest rate is high enough. FedRes **HAS** been creating money without advertising it (i.e. buying bonds with no announcement), but the actions are in the public record. Opposite to OP’s suggestion, if it tried to keep this money creation secret, that would come out and the resultant panic might trigger a sudden drop in dollar valuation. ---
**Author:** ![themapleleaf](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/themapleleaf/32/14349_2.png) [@themapleleaf](https://boards.straightdope.com/u/themapleleaf)\ **Post date:** [October 27, 2026, 5:07pm UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155/31 "2026-10-27T17:07:29Z")
Well, I learned a lot from this thread. It turns out that the answer is much more complex than I expected it would be, ultimately, and all the more reason why I’m glad I didn’t just go to the chatbot. It also vindicates my not being able to make head nor tail of it all these years. 😃 ---
**Author:** ![Chronos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chronos/32/134_2.png) [@Chronos](https://boards.straightdope.com/u/Chronos)\ **Post date:** [October 27, 2026, 9:33pm UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155/32 "2026-10-27T21:33:11Z")
If your printed money has an effect, then it has an effect. If you print money and bury it, then it won’t cause inflation, but it won’t accomplish anything else, either, like paying off debts or buying stuff or whatever. But if you do do something with it, like paying off debts or buying stuff, then that act itself is the mechanism by which it causes inflation. ---
**Author:** ![Gordon\_G](https://avatars.discourse-cdn.com/v4/letter/g/3da27b/32.png) [@Gordon\_G](https://boards.straightdope.com/u/Gordon_G)\ **Post date:** [October 28, 2026, 7:19pm UTC](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155/33 "2026-10-28T19:19:03Z")
As Chronos implies, it is a fallacy to think price level is directly proportional to money supply. In fact a classic equation of monetary theory is . . . . **P = M × V ÷ Q** showing the **P** rice level as equal to the **M** oney supply times the **V** elocity of money divided by **Q** , where Q is GDP or some other macroeconomic total. (Cf. [Velocity of money - Wikipedia](https://en.wikipedia.org/wiki/Velocity_of_money) ) If $100 is injected into a small town where people immediately spend the money as soon as they get it, V might be several transactions per day, and several demand curves might be pushed up (supply × demand curves controlling prices). On the other hand, big banks have gigantic reserve accounts at FedRes that sit with velocity zero (thus having no direct effect on price levels) And in fact, increases in **M** often lead immediately to decreases in **V**. Those gigantic reserve accounts, paying 3.9% interest at present) were an innovation to avoid a repeat of liquidity shortfalls in 2008. (The interest paid by Fed to the Member Banks holding these reserves led to FedRes suffering a net $114 billion loss in 2023.) [Previous page](https://boards.straightdope.com/t/something-i-still-dont-understand-about-printing-money-and-inflation/1034155.md?page=1)