Kevin O’Leary on Inflation: You Printed $7 Trillion in 30 Months. What Did you Think Would Happen?

“For all the talk of inflation, you print $6.72 trillion in thirty months, what the hell did you think was going to happen?” the Shark Tank host says. “Of course there’s going to be inflation.”

Source: Kevin O’Leary on Inflation: You Printed $7 Trillion in 30 Months. What Did you Think Would Happen? - Foundation for Economic Education

Of course most dollars are just digital numbers in bank accounts or credit accounts these days, but that doesn't change the facts. Whether money exits physically or digitally, it still circulates. Through the various means at its disposal, the government put $7 trillion additional dollars into circulation in 30 months thereby increasing the money supply by that much. Since 1990, the dollar has lost 50 percent of its purchasing power. Behavior like this is exactly why.

What happens when you have more of something? Typically, the value of each one is less. That's true of dollars as it is with anything else. A dollar that's worth less equates to prices that are higher. You can certainly argue that there are other factors that have contributed to higher prices in the last few years. While that is true, it doesn't change the fact that increasing the money supply by such a vast amount in such a short period of times is bound to have an inflationary effect (i.e. higher prices). After all, the inflation (increase in the money supply) has already happened. All that was left is to see how high the prices would rise as a result.

Now the government (well, at least the Federal Reserve) is scrambling trying to put a lid on things by raising interest rates substantially. While this can have the effect of decreasing at least the circulating money supply which can then lead to a reduction of prices on some things, it also means that financing things like houses, cars and even things put on a credit card becomes more expensive. It also increases costs for businesses if they rely on credit at all. It is very difficult to put the genie back in the bottle and the mechanisms for attempting it can lead to further unintended and unfortunate consequences.