> Inflation is created by an increase in the money supply

This is wrong again, it’s velocity of money, not net supply. Inflation is possible with a fixed supply of money, I.e. gold

If we disagree on this there can be no fruitful exchange.

Equation of exchange is a cornerstone of economics

https://en.wikipedia.org/wiki/Equation_of_exchange

The monetary side is Quantity of Money times Velocity of money. Both affect inflation. It is therefore Possible to have inflation with fixed money supply.

You may argue it is not likely, or it is not relevant, but to argue it is impossible is like arguing about physics but disbelieving in the laws of motion.

I'm a beginner here - how does this make sense? Why would spending money lots affect inflation?

My simple conceptualisation:

If I sell my heap of junk car to my neighbour for $10000 this week, which he buys for sentimental reasons, and he sells it back to me for $10000 next week, for sentimental reasons, and we continue doing this every week, what would drive inflation?

Conversely, if the government doubled the money supply, suddenly people from outside are earning much more money than they used to for the same work, and to them $10000 is worth half what it was, enough to get them to bid $12000 and get the car. They might only do that once, but the price has inflated.

This is an interesting theory. Basically, as I understand it, you already want to do these things, but since the government can compel you to pay tax on them in its currency, you stick to that currency out of convenience/necessity. If the taxation system is not comprehensive (or you can evade it), you will use the official currency as little as possible, diminishing the amount of useful things transacted in it and thus its value.

Yes! That's exactly how I meant. And it doesn't matter too much if the taxes are high or low, what's important is that they are collected on every activity. I think the prime example is sales taxes in the different states in the US. They are so low (0%-7%) as to be marginal, and collecting them surely costs the consumer economy much more than the gains the state governments have from them.

The rational policy would be to abolish sales taxes and transfer that tax burden by increasing other taxes – but the purpose of the sales tax is primarily to make sure business is always conducted in the government currency, and thereby giving the US Dollar a value. Try to use a foreign currency, bullion, or whatnot to purchase consumer goods in any big box store and you'll be shown the door. The same in most of Europe. Then try to use your foreign dollars or euros to buy consumer goods in the third world, and your money will be more than welcome.

> collecting them surely costs the consumer economy much more than the gains the state governments have from them

Undoubtedly, but why would the tax collection apparatus care about that? They still gain more money than they would if they didn't do it.

They would gain even more by increasing sales tax to 30%, but yet they haven't.