Quote from: b!z on December 09, 2012, 12:03:43 PM

Can you explain more in depth how she is poorer in terms of purchasing power?

There are more tickets chasing the same number of goods so (everything else being equal) the price of the goods in terms of tickets goes up. This is pure inflation.

Imagine you run a local economy with your friends and you buy and sell things using tickets written on paper. Say I run an errand for you and you pay me me 1 ticket. I might then save up my tickets and buy a book off another friend for 10 tickets.
Imagine at the beginning there are 100 tickets in circulation (This is the total money supply).

Everything runs smoothly and there is a certain size to the local economy.

Imagine someone decides they are just going to print new tickets as they cannot be bothered to do some work in exchange for the existing tickets. Say I print 100 new tickets. (Money supply is now 200 total tickets).

I can initially outbid other people for services with my stack of new tickets. I am rich!
As the flood of new tickets enters the economy prices will soon adjust though. The price for doing an errand will soon increase to 2 tickets and the price of a book will be 20 tickets.

Previously if you had saved 15 tickets you could have bought a book and 5 errands, now you can only buy half as much.

Who gains ?
The person who printed the new tickets has taken buying power off all the existing ticket holders.

@neptop. Yes I am in the UK.
I think all the western countries as devaluing their currency at about the same rate (as the exchange rates USD V GBP V EURO are roughly stable)