We have seen in the previous two chapters that the money supply increases in two ways:
1: central banks print money and lend it to banks or buy government bonds
2: banks lend money to companies and individuals such as an car loan and mortgage
Today we look at the consequence of the increase in the money supply: inflation.
What is Inflation?
Today you pay 2 dollar for your bread, tomorrow 2.50 that is inflation. You have to work longer to keep up your life style. That is inflation! Continue reading The effects of money creation, inflation 3 of 6