MONEY PRINTING
How Money Printing Devalues Your Money
When the Federal Reserve prints new money, it doesn't create value - it dilutes the value of existing money. Learn how money printing causes inflation and reduces your purchasing power.
ANIMATION
CURRENT STEP
You have $100. The total money supply is $1,000,000.
HOW MONEY PRINTING WORKS
Federal Reserve Creates Money
The Fed doesn't literally print money - it creates digital money by buying assets (like government bonds) from banks. This increases the money supply.
Money Enters the Economy
Banks receive the new money and can lend more. Government spending also injects new money into circulation.
More Money Chases Same Goods
With more money in circulation but the same amount of goods and services, people have more money to spend, driving up demand.
Prices Rise (Inflation)
Sellers raise prices because demand exceeds supply. The same goods now cost more dollars.
Your Money Loses Value
Your existing money can buy less. If money supply increases 20%, your $100 can only buy what $83.33 used to buy.
REAL-WORLD EXAMPLES
2008 Financial Crisis
The Fed printed trillions through "Quantitative Easing" to stimulate the economy. This contributed to inflation and reduced purchasing power.
COVID-19 Response
Massive money printing during 2020-2021 led to significant inflation, with prices rising across the board as new money entered circulation.
Historical Perspective
Since 1913 (when the Fed was created), the dollar has lost over 95% of its purchasing power due to continuous money printing and inflation.
WHY THIS MATTERS
Hidden Tax
Money printing is like a hidden tax. You don't see it directly, but your savings lose value over time.
Savers Lose
People who save money in cash or low-interest accounts lose purchasing power. Your $100 today will be worth less tomorrow.
Debtors Win
Those with debt benefit because they can repay with "cheaper" dollars. The money they owe is worth less in real terms.
Wealth Transfer
Money printing transfers wealth from savers to borrowers and from the general public to those who receive the new money first.
CRYPTO ALTERNATIVE
Unlike fiat currencies, many cryptocurrencies have fixed or predictable supply. Bitcoin, for example, has a maximum supply of 21 million coins that cannot be increased. This makes it resistant to the devaluation caused by money printing.
US Dollar
- Unlimited supply (can be printed)
- Central bank controls creation
- Subject to inflation
- Purchasing power decreases over time
Bitcoin
- Fixed supply (21 million max)
- No central authority
- Deflationary by design
- Purchasing power can increase over time