New answers tagged money-supply
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Because increasing money supply will eventually lead to inflation. Consider standard monetary model:
$$MV=PY$$
Where M is the money supply, V velocity of money, P price level and Y real GDP. Velocity of money can be thought of as constant - it’s especially the number of times one euro is used. Moreover, real output can in short run respond to money supply ...
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Definition of Money Supply:
The money supply is the entire stock of currency and other liquid instruments circulating in a country's economy as of a particular time. Because of it's definition, the money supply can only be affected if a central bank prints or burns currency. Thus, technically, rates don't affect it per-se.
Velocity of money and money in ...
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You may be confusing money velocity with money supply. From Wikipedia, the velocity of money is "measure of the number of times that the average unit of currency is used to purchase goods and services within a given time period." There is indeed more M2 than M1 but the velocity of M1 is often higher than that of M2. The shared portion of M1 and M2 will have ...
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We know that government shouldn't just print money
I partly disagree. The government (or, well, the central bank) should print the amount of money that is needed to keep the inflation stable. Anything above that shouldn't be done.
Bad what if to do it in a small scale, just a little
What if you stole something small from a nearby shop, just a little?
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