This gets repeated over and over again, but the causality of this has never been proven, as incredible as that may sound.
Yes, the causality of "create too much money -> inflation" is plausible (but note the emphasis on "too much").
However, we live in a world of endogenous money, where money is largely created by commercial banks in the form of loans to private entities. When prices increase, those loans get bigger. So there is also the causality "inflation -> create more money".
At the same time, there are other factors that can drive inflation, such as workers and companies exercising price setting power (which Econ 101 likes to pretend doesn't exist, but plays an important role in the real world).
So yeah, the causality that you're casually throwing out there hasn't actually been proven as the driving factor here.
At the same time, the widespread belief in it and similar misunderstandings causes us as a society to make extremely damaging macroeconomic policy decisions, in particular the decision to attempt to fight recessions using monetary policy instead of fiscal policy.
bingo, money is enormously more complicated than microecon suggests. Micro-econ thinks Keynesian economics are full of shit, yet they stimulated us right out of a micro-economic hole during the 30s.
We had 4 years with 4x the reward, 4 years with 2x the reward, and about 3 years with the current reward, which makes for 1/(4x4+4x2+3) = 1/27 inflation.
Yes, the causality of "create too much money -> inflation" is plausible (but note the emphasis on "too much").
However, we live in a world of endogenous money, where money is largely created by commercial banks in the form of loans to private entities. When prices increase, those loans get bigger. So there is also the causality "inflation -> create more money".
At the same time, there are other factors that can drive inflation, such as workers and companies exercising price setting power (which Econ 101 likes to pretend doesn't exist, but plays an important role in the real world).
So yeah, the causality that you're casually throwing out there hasn't actually been proven as the driving factor here.
At the same time, the widespread belief in it and similar misunderstandings causes us as a society to make extremely damaging macroeconomic policy decisions, in particular the decision to attempt to fight recessions using monetary policy instead of fiscal policy.