Who Causes Inflation?

An article in today’s ABQ Journal details the new John Adams Dollar Coin which goes into circulation today. Contrary to most people’s understanding of money, the U.S. Mint fervently hopes that people will start “collecting the coins.”
The article notes the flops of the Susan B. Anthony and Sacajawea coins while simultaneously explaining that “the U.S. Mint believes it has the right [marketing] strategy.” Critics have noted that the dollar bill works just fine when it comes to this issue, yet the U.S. Mint continues to try to promote unnecessary and expensive endeavours.
One cause of monetary inflation is an abundance of unnecessary money chasing fewer goods. When the government mints money for the sake of coin collectors, the value of the dollar drops as the amount of money flooding the market grows. Apparently this could total 900 million coins in the first year, yet no plans have been made to decrease minting the dollar bill. And we wonder why the Euro regularly outperforms the dollar. Turning money into a consumer product certainly won’t help things.

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One Reply to “Who Causes Inflation?”

  1. The good news is that the Fed can offset the increase in money supply by its open market operations.
    Welcome to the RGF blog, Stephen.

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