Government Spending = Increase Inflation?

Inflation occurs when the government prints more money to meet its obligations. The result is a type of fraud. If they borrow a million dollars, then pay it back with inflated money (dollars that are worth less than the dollars they borrowed), they are cheating the lenders. If the government continues to spend more than they can pay back and compensate by printing money, they lose their credit rating and have to pay greater interest on their debts. It becomes a spiral that leads to failure.

Imagine the predicament of seniors on Social Security who have saved for retirement. If the value of their savings diminishes, and the purchasing power of their fixed incomes shrinks due to inflation, their standard of living is reduced. The government does not have to make the politically unpopular step to reduce Social Security payments, they just pay out benefits with money that is worth less. That is fundamentally dishonest.

It only increases inflation if they print money or sell bonds to the fed to do it. By doing either of those, they increase the money supply. The more dollars there are representing the same amount of wealth, the less each dollar is worth.

Simple mind experiment: Suppose a kingdom has one bar of gold. Rather than pass the bar of gold around, a dollar is printed to represent that bar of gold. One dollar is worth one bar of gold. Now suppose the king prints another dollar. He did not double his wealth, as he still only has one bar of gold, but now each off the two dollars is represents only half of the bar. Thus, each dollar is worth only half a gold bar.

If ten dollars are printed to represent the one bar of gold, now each dollar is only worth one-tenth of a bar of gold. Again, printing more money did not make more wealth, but rather diluted the value of the money.

Money supply has to keep pace with the size of the economy (amount of wealth). If money is printed at a rate faster than the economy grows, there is inflation as the value of the dollar drops. Since each dollar is worth less, it takes more of them to buy the same things, so prices go up.

If the economy grows (amount of wealth goes up) but no new dollars are printed, then their value goes up because each dollar represents a larger slice of the economic pie. With greater value for the dollar, prices drop in a period of deflation.

When they spend money they don't have and start printing money it does. The more money there is the less it is worth. In other words increasing the money supply decreases the purchasing power of the dollar.

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GDP and inflation increase, unemployment decreases. This is because added spending by the government and lower taxes both add to demand, which increases sales, which increases production to meet the higher demand, which increases employment (thus lowering unemployment) to produce the extra production. Increased demand would put upward pressure on prices, increasing inflation.

It's not government spending per se, its "excessive" government spending. That's because the country has to borrow money to spend too much and that results in inflation. When a country prints too much money, the value of the money in circulation loses value. That's what inflation is, your money is worth less to everything costs more.