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Do Banks Cause Inflation?  What are other possible causes?
There are several causes of inflation. One is called cost push — that is, if the price of e.g. oil goes up sharply (as it did in the 1970s), it creates inflation by making everything cost more. Another is called demand pull: if labor unions bargain for higher wages (as they did in the 1960s), their wage costs push up prices, especially after they start buying. The kind of inflation that the banks cause is monetary inflation. That is, for every dollar of deposits, they can make $5 or $10 of loans. So even though they don't "print" money (the Fed does) it's as if they did. The result could be the kind of inflation called "too much money chasing too few goods."