Won't creating money cause inflation?

This is perhaps the most common concern about MMT, and it's an important one. The answer is: it depends on the circumstances. Creating money doesn't automatically cause inflation - what matters is whether there are real resources available to absorb that spending.

Inflation occurs when there's too much money chasing too few goods and services. If the economy has unemployed workers, idle factories, and unused capacity, government spending can put those resources to work without causing inflation. The spending creates real output, not just higher prices.

The real constraint on government spending isn't money - it's resources. If the government tried to spend when the economy was already at full capacity, with no available workers or materials, that would cause inflation. MMT economists emphasize that we should always be asking 'do we have the real resources to do this?' rather than 'do we have the money?'

Historically, major inflation events like Zimbabwe or Weimar Germany were caused by massive supply shocks (destruction of productive capacity, war, sanctions) combined with other factors, not simply by money creation.