Yes. Its quite simple. The amount of goods and serives in the world is not fixed but grows slowly (as capital investment is required and capital isnt abundant) The number of currency units is increased at a much larger rate. As such prices (prices in currency) rise. Had these new pieces of paper been created the prices would have remained the same (all things being equal). James dines explains it quite well and often says things like "there are more and more dollars chasing the same goods and services" http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/7/12_James_Dines.html is an interesting listen. But think about this. above ground gold supply increases at +- 1.2-1.5% a year. Its not perfect but its a lot less than M1, M2 and M3 increases. When we were on a classic gold standard (when you could redeem paper for gold IE pre bretton woods) When the world had inflations it was because the metal backing had been removed (think the US continental wars, Wiemar Germany, Zimbabwe as a more recent example) More currency competeing for same goods == higher prices. Hope that helps clarify my stance. I know a lot of people disagree but history is on my side here. As an aside (I cant remember when exactly) but the oxford definition of inflation was an increase in the general price level brought on by an increase in the money supply. IN the past couple decades (again I cant remember when) they dropped the latter part and left it as An increase in the general price level. Ill stop putting people to sleep now ;) - P
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