I just genuinely don’t understand how it works, like couldn’t you realistically just creat more money. Isn’t it just like a number in a bank account? Am I really dumb?
In: 4
You cannot create value from nothing. Our dollars are only valuable because they are a stand in for labor.
Think of it this way – imagine all of the value of our labor is a pizza. Printing money would be making more cuts of that pizza without actually adding more pizza to the equation. So you just end up with more and more pieces that are smaller and smaller.
The exact same thing happens to the value of our dollars when they print money. The amount that money in total is worth doesn’t change, but every dollar added diminishes the value of the existing dollars a little bit. Eventually you end up with hyper inflation where people need to wheel in a suitcase of money to buy a load of bread.
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