Printing Money Causes Inflation?

Beyond Highbrow - Robert Lindsay

Oh really now?

It is nearly a law of modern economics that if the government prints money, this automatically causes inflation. It rests on some dubious assumptions, mostly that there is now more money in the marketplace chasing the same amount of good, and that therefore, the new money must cause some sort of demand inflation.

But I reiterate, there is absolutely no ipso facto law of economics that states that printing money automatically causes inflation, lowers the value of one’s currency, or raises interest rates.

Why would printing money lower the value of one’s currrency? It doesn’t. If your currency is backed up by something of real worth, such as gold, I suppose that printing more money would reduce the value of one’s currency. After all, you now have more dollars for the same amount of gold, so the dollar automatically declines in value.

But if your currency is…

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