Inflation, which means a steady rise in prices overall, happens only when the total money supply in an economy grows. This increase in money, often called "printing money," can be physical cash or digital money created through lending and government policies. Without more money in the system, if prices go up in one area, they have to go down somewhere else because the total money available limits how much can be spent on everything. Sometimes prices rise temporarily due to supply problems, but that is not true inflation unless there is more money chasing goods. This key idea, highlighted by Milton Friedman in his Nobel Prize winning work, shows that lasting inflation is mainly caused by increases in the money supply.

Inflation is caused by a greater number of dollars chasing the same number of goods and services. Look at the used car market, or the housing market, or the GPU market during the crypto craze several years back. It all falls back to basic supply versus demand mechanics. Inflation can be caused by printing, but it can also be caused by redistributing money from location X (Microsoft stock) to location Y (food spending).