Misdirection of resources

Distorted money (vs. sound or hard money) produces malinvestment of resources, tending to emphasize capital goods over consumer goods. This is because the capital producers misinterpret the distorted money as representing real savings. (Real savings represent a time shift of preference of consumption. Can't eat your cake and have it, too.) Once the distorted money has been invested into capital goods production (representing an increased ability to produce goods), there is no market for those goods, since the market did not accumulate capital (by deferring consumption) to pay for those goods. Additionally, the market is burdened by the debt incurred to produce the fiat capital to malinvest in unneeded production.