>>14581388
Hello newfriend. I will "ELY5" as they say. You are in charge of a new country, Frendustan. You notice that the locals barter milk for eggs and goats for brick and bread for a day's labor. Since this process is inefficient, you decide to give them a middle step that everyone will accept as a "stand-in" for their milk or eggs or bricks. That way the bricklayers don't have to procure goats before getting bricks. At first you try gold, but you find that gold is very scarce (and expensive), so instead you decide you'll just give everyone a piece of paper with a picture of Apu on them instead. You tell them that if you have these Apus, you can pay the government with them instead of giving the government your goats, milk, bricks, etc. Everyone likes the idea. So you give them Apus and they give you back Apus.
The goatherds take Apus and can buy bags of cowshit with them. And you can use your Apus to buy stuff your government needs, like swords and thrones. Then you get the brilliant idea that you can get those swords and thrones essentially for free by printing up more Apus. But as you do, you notice that every day the blacksmiths are asking for more and more of those Apus for the same amount of swords, and you find out that the milkmaid is asking for more and more Apus to buy her milk. What used to take only 1 Apu to buy now takes 100. That's because 1 Apu is only worth the total economic activity of the people using Apus divided by the total number of Apus in circulation. As you increase the supply of Apus, the value of a single Apu drops. Additionally, no other country wants to give loans to Frendustan because they know that the value of an Apu will be worth much less when the time to repay the loan arrives.