I'm not at all an economist, and I expect I'll make some mistakes here, but I can think of two things that might be relevant to your question here. First is https://en.wikipedia.org/wiki/Deflation#Scarcity_of_official... which is that as you can produce more value for lower cost, with nothing else compensating, then things become cheaper. It's the value of things that's "made" in Ford's factory, not the money. If, hypothetically, you had a completely fixed money supply, then you wouldn't get money from nowhere; instead the price of everything else in the market just goes down. There are some reasons to not prefer deflation, so to counteract this the government prints more money. For another example (I think?), look at Bitcoin, where there's been massive deflation because the growth in value has far outpaced the rate of new bitcoins added to the economy by mining.
I'm less certain about the second thing, but I think that debt (and banks?) increase the (effective?) money supply. If you borrow money from a bank (or debt directly from a company for goods or services) to build a new house, then you've acquired a valuable new asset, the laborers you paid acquired new currency, so the total economy can exceed the number of bills that have been printed and are physically in circulation.
There's a lot there that I'm not sure about, and there's plenty of further fascinating questions that follow on from there that I don't know anything about, but I hope that helps you understand some things about how production and the money supply work!
> Whenever a bank gives out a loan in a fractional-reserve banking system, a new sum of money is created. This new type of money is what makes up the non-M0 components in the M1-M3 statistics.
Is bitcoin undergoing deflation? (asking because I'm not sure) it's going to be worth $5,000 soon it looks like I thought deflation is the opposite of that where there's so much it's worthless.
I just assume we get money from other countries. And provided we (people in the US) accept dollars from each other then it keeps going.
Yeah it's confusing I'm definitely not an economist myself haha.
I'm less certain about the second thing, but I think that debt (and banks?) increase the (effective?) money supply. If you borrow money from a bank (or debt directly from a company for goods or services) to build a new house, then you've acquired a valuable new asset, the laborers you paid acquired new currency, so the total economy can exceed the number of bills that have been printed and are physically in circulation.
There's a lot there that I'm not sure about, and there's plenty of further fascinating questions that follow on from there that I don't know anything about, but I hope that helps you understand some things about how production and the money supply work!