Impact of Uneven Currency Printing on Inflation

Effects if Government Prints Currency for a Few

Summary: Printing excessive currency and distributing it unevenly creates inflation and disrupts economic balance, particularly in cross-border trade. Inflation stems from human tendencies to reduce the value of goods and services per unit of monetary value over time, coupled with unequal money circulation. If a government prints money for select groups, it amplifies disparity, benefiting only a few, often leading to illegitimate gains and economic imbalance. Lowering interest rates increases money supply, encouraging infrastructure projects, but unequal distribution of profits among stakeholders exacerbates inflation. A trickle-down approach shows how minor profit increases at the top disproportionately impact a larger segment of the economy, furthering monetary inequality and inflationary pressures.

Case Problem

Effects if Government Prints Currency for a Few

Opinion

Well, it is well-known printing of unjustified amount of currency and its distribution in the people of a country will increase the inflation, (to be more precise, equal distribution of currency). But inflation to whom, for foreign entities outside that country. Purchasing parity is again same for all inside the territory. But it will surely create imbalance cross-border. No, Why?

The reason lies in the Human tendency to reduce the amount of services/goods per unit monetary value with respect to time.

This human tendency to appreciate the money against the goods along with the money circulation disparity would create inflation.

To be more precise, if govt. prints the money for a few, it will surely create a disparity of money circulation and hence may benefits a few (which may/may not be used for legitimate/soundful).

Concerns which usually govt. of any territory keeps his power at their bay for hampers the money circulation and hence inflation.

Inflation is not just minting money and distributed equally among the territorial stakeholders.

Inflation is something if money circulation goes unequal distribution in a handful of operating agencies/stakeholders.

But what we are being is lower the interest rates would increase supply (money) and increasing it would reduce supply and thus inflation. Because majorly loan segments are a governing factor for infrastructural projects/economical trajectory. Unequal distribution is cluttered at leastful here in this top-down triangle graph.

Less profits are being accumulated on the top side graph as compared to lower ones, thus increase the unequal distribution of money supply and thus inflation.

#Trickle-Down Approach (Tabular Form)

A Minute increase of Top Basket Leads to Inflation (Impact to major segment)

Here  P1,P2,P3,P4,P5,P6 are the number of People/Stakeholders Impacted due to Marginal Deviation in the Interest/Profit Rates.

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Disclaimer : The above stated Case Problem and Opinion are subject to personal views and approach from a Layman’s point of view and may not stands pragmatic in real world scenario and thus may differ from person to person in their way of solving it. Enjoy the joy of writing and a stimuli of brain to it.

Deepak Sharma | BSc. Physical Sciences (DU), MA Economics (IGNOU), PGC Strategy (IIMB)