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I am not clear about the source of money when UK and US announced the COVID-19 financial help. For example, in the UK an employee may be eligible for 80% of the wage, capped at £2500, given their job is now gone as the result of the virus outbreak.

I assume this will come from the government printing more money, therefore shall we expect high inflation in the coming months?

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  • Why would you assume that the government will just print money rather than borrowing money ? – xyious Apr 2 '20 at 16:37
  • Due to the size of the loan required. I just wasn't able to find the evidence for the source – oleksii Apr 3 '20 at 11:11
  • I'm not entirely sure what kinda restrictions the EU puts on member countries that are not part of the euro zone.... but for the euro zone obviously it's impossible for member states to just decide to print money. Also I would assume that it's very big news if the country just decides to print more money (It would be a huge deal in the US). The size of the loan really isn't extraordinary. The US borrows a trillion dollars a year these days. – xyious Apr 3 '20 at 14:34
  • @xyious The UK is printing much of the money, in a way that can be reversed later, and it’s not making big news. theguardian.com/business/2020/apr/09/… – Mike Scott May 2 '20 at 0:20
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Not necessarily... We could get into a more technical treatment on this topic, like this article.

But a more intuitive way to explain why this isn't the case: $100 making 10 round trips causes more "inflation" than $200 making 1 round trip.

In other words, it depends if monetary "velocity" drops off or not. If you're even more curious, read about the formula MV=PQ here.

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