> but if you magic money into existence, you've caused inflation of your currency
No, you've increased the amount of money. That's not the same as inflation.
Let's say I've got an economy with $1000 in it. That means that my GDP adds up to $1000, by definition. (I'm ignoring velocity here.) $1 has a certain value. Now Intel turns on a new manufacturing facility, and we have an economy just like it was, except it contains a lot more state-of-the-art chips. If we stay with $1000, then each dollar is worth 1/1000 of the economy, and since the economy now contains more stuff, the value of each dollar grew. To maintain the value of each dollar at a stable amount, we need to grow the total number of dollars as the economy grows.
2008 was different. In 2008, $4 Trillion had just evaporated. The Fed injected $4 Trillion into the economy to try to stabilize things. It more or less worked.
No, you've increased the amount of money. That's not the same as inflation.
Let's say I've got an economy with $1000 in it. That means that my GDP adds up to $1000, by definition. (I'm ignoring velocity here.) $1 has a certain value. Now Intel turns on a new manufacturing facility, and we have an economy just like it was, except it contains a lot more state-of-the-art chips. If we stay with $1000, then each dollar is worth 1/1000 of the economy, and since the economy now contains more stuff, the value of each dollar grew. To maintain the value of each dollar at a stable amount, we need to grow the total number of dollars as the economy grows.
2008 was different. In 2008, $4 Trillion had just evaporated. The Fed injected $4 Trillion into the economy to try to stabilize things. It more or less worked.