As Governments Create Money They Raise Inflation
Something Gotta Give, And It's Going To Be You
#1: Because the government needs it to get out of the debt they have incurred. (A Billion $ A Day in Interest and climbing.)
#2: Inflation is a natural economic outcome of creating money that has no basis in real goods or services. (I.E. the “Stimulus Plan, 1 Trillion $ worth of no-basis in real goods or services.)
This tome from the CBO explains this in detail and from a factual basis.
From the Congressional Budget Office on dealing with the debt.
An alternative approach is to increase the supply of money in the economy. But as governments create money to finance their activities or pay creditors during fiscal crises, they raise inflation.
Higher inflation has negative consequences for the economy, especially if inflation moves above the moderate rates seen in most developed countries in recent years.
Higher inflation might appear to benefit the U.S. government financially because the value of the outstanding debt (which is mostly fixed in dollar terms) would be lowered relative to the size of the economy (which would increase when measured in dollar terms).
However, higher inflation would also increase the size of future budget deficits. Specifically, if inflation was 1 percentage point higher over the next decade than the rate CBO has projected, budget deficits during those years would be roughly $700 billion larger.
Several factors contribute to that estimate. Investors, after having their investments devalued by the rise in prices in the economy, would demand higher interest rates in the future, even if inflation was eventually reduced; thus, as debt matured, it would be refinanced at higher rates. Indeed, even raising the perceived likelihood of higher inflation during a fiscal crisis would trigger immediate further increases in interest rates.
Moreover, the amounts of many government benefits rise when prices rise, and much of the income tax system is indexed to inflation.
On balance, the increase in tax revenues resulting from higher inflation would be more than offset by higher payments for benefit programs and higher interest payments as the outstanding debt rolled over and ongoing deficits required the issuance of more debt.
