We often hear “money printing causes inflation,” but how exactly does money printing inflation work?
Imagine an economy with only 10 apples and $10. Each apple costs $1.
Now, imagine the “Central Bank of Apples” prints another $10 and drops it from a helicopter.
Now there are 10 apples, but $20 chasing them.
What happens to the price? It doubles. Each apple now costs $2.
The apples didn’t become more delicious. The money just became less valuable.
This is exactly what happens in the real world. When the government prints trillions of dollars to pay for stimulus checks or wars, the supply of goods (houses, cars, food) doesn’t increase instantly. So prices must rise to absorb the new cash.
Inflation is just the government transferring value from your savings to their printing press.
Bitcoin prevents money printing inflation because the supply is fixed. No one can print more Bitcoin to chase the same number of goods.