Cash is being pumped into our economy, therefore, people want to buy more stuff, because now they can "afford it."
So now with more competition for goods and services, prices go up because there is more money than there are goods and services. I work with businesses in the trades (auto repair, plumbers, HVAC, insulation, etc) and they are all at full throttle, and cannot handle any more work. So those companies are going to start raising their prices. But this happens in all areas of products and services. There's just not enough stuff.
As a result, there's inflation. Inflation is the decline of purchasing power of a given currency over time. I lived through the 1980s, where there was an inflation rate of 16 to 18%. This means, let's say you have $10,000 in the bank, in 1 year, the purchasing power is $8,200. The next year it will have the purchasing power of $6,724. The third year your original $10,000 will be worth $5,513. Your bank account will still be $10,000, it's just that you'll only be able to buy $5,513 worth of products and services, on the average.
The way to protect oneself is to buy stuff, and not keep any cash in the bank account. If you purchase $10,000 worth of canned food today, the value of it will remain the same over time, because you purchased, oh, let's say 10,000 cans of food, but in 3 years, you would only be able to buy 5,513 cans of food. So you get rid of cash as fast as you can. But instead of buying food, which you might do, you also buy houses, cars, anything. Because those things, when you sell them, will be the same price. If a can of peas goes from $1 to $3 over 3 years, you can sell your 10,000 cans of food for $30,000, if you could, so you still have the same amount of purchasing power. It's not the worth of the things that changed, it is the worth of the money to buy the things decreases.
This is well-known, so people with a lot of money are buying second houses or anything else to get rid of cash. So the world is awash in cash, but runs out of stuff to sell, and prices go up. It is a vicious circle, and keeps spiraling out of control, and eventually you can get into hyperinflation, where you can have $1 trillion dollars to buy a loaf of bread. Here is a list of countries that have experienced hyperinflation: https://static.seekingalpha.com/uploads/2012/7/14/426795-134... Most recently, Zimbabwe had hyperinflation and here look at the money supply: https://static.seekingalpha.com/uploads/2012/7/14/426795-134... They just started printing more and more money, until it got out of control.
In Venezuela in 2016, inflation reached 1,000,000%. This means that if it took $1 to buy a loaf of bread in 2015, a loaf of bread would cost $1,000,000 in 2016. And so, the government would be forced to print $1,000,000 bills. In April 2019, the International Monetary Fund estimated that inflation would reach 10,000,000% by the end of 2019. Here is a real 50 trillion bank note from Zimbabwe due to their hyperinflation: https://cdn.shopify.com/s/files/1/0251/2392/products/zimbabw...
This is the exact same thing the USA is doing with unemployment benefits, and people make as much or more than in their jobs, and they don't have to pay rent at all, so all that money goes into all kinds of stuff. The USA is effectively printing up money.
Will the USA end up like Zimbabwe? Almost guaranteed not to, as we have a lot stronger economy, but no one knows the future with certainty.
