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04-05-2013, 07:05 PM #24
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Does raising minimum wage cause inflation?
Well inflation has little difference between fiat and deposit currency, more with the facilitation between production and trade. When you do increase the money supply, it becomes increasingly worthless which is the main definition of inflation. However, this can be offset by production and/or trade in the real world growing at the same rate of increased creation of debt (which is money, because without money there could be no debt and the other way is true as well).
The Government who prints the money (fiat currency) only makes up about 5% of total monetary value in the system. Money gets created and destroyed every second of every day. Do you wonder where the bank gets its money to give people who take out student, auto, home, or any other types of loans? It simply creates it out of nothing and writes it into your account or check for you.
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