No, that's pouring gas on a fire

Posted on: February 10, 2022 at 09:58:18 CT

The simple definition of inflation is "too much money chasing too few goods".

Pumping money into the economy only increases the supply of money, it does nothing to increase the supply of goods and services. It may relieve the crunch that higher prices are putting on some folks temporarily, but in the long run it only makes the inflaction problem worse.

The two best examples that come to mind of the dangers of inflation are Weimar Germany and Venezuela.

Inflation got so high in Germany that some workers were paid twice a day and allowed time at lunch to go shopping because money earned in the morning declined so much in purchasing power by the end of the day.

Venezuela has ample petroleum reserves and for many years was the most prosperous nation in South America. A left leaning government came to power, started pumping cash into the economy and inflation took off. Despite its wealth in oil and gas, Venezuela went from the most prosperous nation in South America to one of the poorest.