Not All Money Printing is Created Equal

Unlike historical hyperinflation where governments physically printed currency, US dollars are loaned into existence through the banking system. When you deposit $10,000, banks keep only a fraction and lend out the rest (say $9,000). That borrowed money gets deposited elsewhere, and those banks lend out most of it again. This creates a multiplier effect where the current $22 trillion money supply sits on only $3 trillion in actual reserves.

The Critical Difference: Future Demand

Every loan creates an obligation to repay the principal plus interest. This means each dollar lent into existence creates future demand for more dollars than currently exist. Physical money printing just increases supply and stops there, but debt-based money creation simultaneously expands current supply while creating even greater future demand.

Why Deflation Keeps Getting Postponed

This debt structure makes contraction inevitable as loans come due, similar to what caused the Great Depression. However, the Federal Reserve now backstops every potential deflationary event by creating more money, which only makes the next required intervention larger.

Extended Inflationary Period Ahead

The debt-based money system means the US faces a prolonged era of rising prices and inflation that will last considerably longer than most anticipate. Any chance for a “great reset” or collapse remains far off in the future rather than an imminent threat, though the underlying debt dynamics make such an outcome inevitable eventually.