Quote:
Originally Posted by blankall
I don't know if there's a single "main" cause. However, the government printing cash was certainly a major contributing factor. There's simply more money in circulation now. Therefore, each individual dollar is worth less.
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Only a portion of that ended up in the hands of individuals though. Most of the money (particularly in the US) was spent on supporting businesses, many of which used the money for things like stock buybacks and dividend increases.
And even then, the relationship between money supply and inflation isn't as direct as people like to suggest. Some countries with modest inflation (Israel is a good example) had huge increases in their money supply. On the other hand, places like New Zealand, the UK, Germany, the Netherlands, etc. had far more modest increases in money supply over the last couple of years than the US or Canada did, yet they're seeing high inflation.