Money Talks: Is printing money causing inflation?

TEMPLE, Texas — We hold listening to that inflation is so excessive as a result of the federal government has been printing a lot cash, however are they actually printing it? Or is there one thing else occurring? 

As of Nov. 1, there was a spread of between 5.3 billion and 6.9 billion American greenback payments in circulation, and extra are at all times needing to be printed to account for misplaced, broken and hidden away payments. 

So, are we actually printing extra money? On this Cash Talks, we’ve got the reply.

“If you hear in regards to the Fed or the federal government printing cash, they do not really print bodily payments today,” mentioned licensed monetary planner Neil Vannoy. “The most typical method the Fed adjusts the sum of money within the financial system is by shopping for or promoting treasuries. This is called ‘open market operations.'”

Does that imply {dollars} are simply investments being purchased and offered?

“The Fed buys treasuries to place cash into the financial system, and it’ll promote treasuries as a technique to take cash out of the financial system,” Vannoy defined. “Creating cash by shopping for and promoting securities has the identical impact as printing payments would have, but it surely’s rather more environment friendly.”

So, has rather a lot been “nearly printed,” or purchased by the Fed these days?

“Sadly, including an excessive amount of cash to the system can create or add to inflation whether or not it is within the type of bodily payments or finished digitally,” mentioned Vannoy.

That’s the place we are actually. So what does that imply for the typical hard-working American?

“The Fed creating cash will not have a direct impact in your financial savings, which means that your cash will not robotically be price much less if there’s extra money in circulation,” Vannoy informed 6 Information. “That mentioned, any inflation brought on by Fed actions will not directly trigger your cash to be price much less over time.”

That greenback you had in 2019 is now price .86 cents because of the current inflation.

“Inflation – whether or not or not it is brought on by the federal government printing cash – is without doubt one of the primary causes people must spend money on belongings like shares, actual property and different belongings which have the potential to outpace inflation over time,” mentioned Vannoy.

Bear in mind, we’re at all times combating inflation. For those who have been to save lots of 1,000,000 {dollars} below your mattress by age 25, by the point you retired 50 years later, that buying energy of that money would solely be 600,000 {dollars}. So, inflation is a hidden tax that all of us should cope with!