🎛️ Simulation · Intermediate
Printing Money
A government pressures its central bank to create money to pay its bills. The money supply grows 40% per year.
The facts
- Money supply growth jumps from 5% to 40% a year.
- The economy’s ability to produce goods (productivity) does not change.
- Interest rates stay where they are.
Your predictions
Playing it out…
Why?
When the money supply grows much faster than the amount of goods and services the economy can produce, you get “too much money chasing too few goods.” Prices rise rapidly, lenders demand higher interest rates to protect against inflation, and wages fail to keep up, so real wages fall. Extreme cases — Weimar Germany (1923), Zimbabwe (2008), Venezuela (2010s) — become hyperinflation.