In Fiat currency, why do some economists think that an increase in the money supply wouldn't cause inflation?
In Fiat currency, the value of money is tied to what traders and consumers feel money is worth, and there is no real way of fixing the value of money at a certain point. So, money is worth whatever somebody will offer for it.
Say 2 people have $100 between them, and their services/goods are both of equal value - one ends up with $50, the other also ends up with $50.
If they had $200 between them, it would still be that one has $100 and the other has $100? Surely? In what world would this not happen?
The only way that I can see that an increase in the money supply wouldn't cause inflation of everything, is if there was a lot of inequality. So, e.g. one person's money supply triples but the other person still has $50, just because the first person happens to be very few steps removed from the central bank where the money is generated, so they see the new money supply first. But icl that seems like a horrible idea to me, because then many people have in real terms less money, simply because they are more removed from the central bank ?? Like, this is not a good outcome
I haven't had any formal economics training - I'm very open to being corrected on any misunderstandings