How does debt cause inflation?
When we have to borrow dollars from the treasury, that we don't have. The treasury prints new dollars....but nothing to back them except for the dollars already out there. This dilutes the worth of all the dollars. which causes inflation.
Sellers raise the price to recoup the devalued dollar to make the same profit as before.
Employers to some extent raise wages to offset the devalued dollar. But not always
We don't borrow from the Treasury. The Treasury borrows money on behalf of the Govt (the Treasury is part of the Govt). The money is borrowed from private investors, businesses, and foreign governments.
New money is created by the Fed, not the Treasury. The Treasury does the actual printing of currency and coin, but ships it to the Fed for distribution into the money supply.
Inflation is only created when the supply of new money exceed population and real GDP growth. That is caused by an increase in the money supply, not Govt debt.
There are many causes for inflation, depending on a number of factors. For example, inflation can happen when governments print an excess of money to deal with a crisis. As a result, prices end up rising at an extremely high speed to keep up with the currency surplus. This is called the demand-pull, in which prices are forced upwards because of a high demand <a id="inflation" href="http://www.wisegeek.com/what-causes-inflation.htm#il">more</a>
What Causes Inflation?
I really get tired of having to do the work in this Iriemon. Sometimes you think you know more than you actually do