Why printing money is not, in itself, inflationary.

It's the spending of it that matters.

And while that seems like a stupid point to make, it's really not.
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Let's say the central bank *actually* prints a bunch of *actual* money.

And then they have a giant bonfire and burn the same amount.

Inflationary or not?
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Probably not, right? Cool.

Now imagine they print a bunch of money, lock it in an impenetrable vault, and then forget how to open the vault.

Inflationary or not?
3/

Again, probably not.

That money just hasn't entered the ecosystem in a meaningful way so like... yes, it got printed, but that's just an irrelevant fact until it starts getting spent.
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Now: what if we print a bunch of money and hand it to people who already have more money than they need?

Is that inflationary?
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I'm gonna say that no, it's not - if we hand money to the super rich who already have everything they need, this isn't all that much different than locking it up in a vault.

It's just not getting into circulation.

At least not very much of it.
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And this is why it's funny when people think that the total amount of money (by any measure) can be a simplistic proxy for future inflation.

Like... it's just not how things work - the monetary system is a complex web of relationships, and that cash might not flow anywhere.
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It's conceivable that you could 10x the money supply and it would have absolutely no impact on anything.

It really depends on what you do with the increased supply.

Which is why people spend a lot of time thinking about this.
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It's also why people bother to try and measure things like "velocity" - to see whether any of that new money is getting transmitted into the economy.

(Narrator: "it's not")
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So if you're running an inflation thesis here because you saw a scary chart of the M2, make sure you have a good, high-confidence story about how that money gets into the system to drive prices up.

Because if recent history tells us anything, that bit is harder than it looks.
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Finally, this is why solving (lack of) wealth distribution is important: to solve the deflationary 'money vault' problem.

Every time I bring this up, Twitter calls me a communist.

I'm not. I'm a stark raving capitalist who wants my customers to have some money to spend.
11.