why would printing more bills cause the value to go down? Why wouldn’t prices stay the same?
In: Economics
At the highest levels of the economy and over time, everything is essentially an auction. You may not be able to negotiate the price of a McChicken, but McDonalds got that chicken by out-bidding Chick-fil-a for an order of 100,000 chickens. Since printing money doesn’t print more chickens, if you handed McDonalds and Chick-fil-a a bunch of money, they’d end up bidding higher for the chickens that do exist. So the price of chickens goes up. A contractor working to put food on the table for their children would then need to raise their rates to continue to be able to afford chicken, and so on until everyone has either gotten a raise, or now can’t afford as much stuff with their same income.
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