why inflation happens. Why does it matter how much of our money is printed?
In: Economics
Money is used as a placeholder for value, so if you want to obtain something of value you need money in order to exchange for it. People place value on money because it is somewhat rare; you cannot obtain it without some effort so people are willing to exchange things of value for it.
Generally speaking the more money there is around in circulation the easier money is to obtain. If money is easier to obtain the amount of value each individual unit can represent decreases. If everyone has tons of cash you won’t be willing to give up something you value greatly without them giving you a whole lot of cash in return. If people only have a little cash then you might be willing to accept less for the thing you value greatly, as that small amount of cash will in turn allow you to trade for things of significant value.
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