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The government printing new money increases "the money supply". That's about it. Redistribution of wealth does not increase or decrease the overall supply.
The government printing new money increases "the money supply". That's about it. Redistribution of wealth does not increase or decrease the overall supply.
You're wrong. Look up fractional reserve banking. When a bank issues new debt, it is increasing money supply in the economy (it has created money). When the borrower pays off the loan, he decreases money supply.
While Josh is correct, when it comes to mortgages and car loans, the money supply is more or less unchanged. The reason for this is because the money typically goes from bank -> accounts receivable -> borrower -> seller -> accounts payable -> bank. So the money supply is eaten up in the same transaction in which it is increased. One bank basically lends out money to one person so another person can pay off a debt.
Money supply to whom? The mortgage holder? The bank? GDP? GNP?
The money supply to those who professionally track the money supply...M1, M2, etc.
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