Inflation would happen no matter what.

Inflation would still happen.
For one, consider those on fixed incomes, like Social Security. Their money won’t increase, but everything will cost more.

Inflation does not just depend on the amount of currency but on how quickly it circulates in the economy, what is called the velocity. If people are afraid that prices will go up, they will spend money more quickly, driving up inflation.

Inflation is about the relationship between the amount of currency in circulation and the amount of goods and services available on the market, specifically currency increasing faster than production of goods and services. It is not about exchange rates.

@LostInParadise That isn’t quite how it works.

MV=PQ Money supply times the velocity of money equals the price of goods times the quantity of goods. If one increases the money supply without changing the velocity of money nor the quantity of goods produced, prices will rise.

But encouraging a faster velocity of money is often done to increase productivity, such as was done last summer coming out of the COVID retraction. By making sure people had enough cash on hand to recirculate it quickly, the economy snapped back pretty quickly.

@RedDeerGuy1‘s pondering makes no sense, though, because having equal amounts of currency for every country would disrupt exchange rates. Uruguay does not need the same amount of currency as the United States. Neither does Canada.

@zenvelo , The point is that M and V count equally in the determination of P.

@LostInParadise “The point is that M and V count equally in the determination of P.”

They count equally in the detemination of P and Q.

If employment is high and the economy is near capacity then Q will not be changing much in the short term. If no new money is printed then M will be the same. The value of P will be driven by V.