Please explain, as I cant find a good answer anywhere online. It is all contingent on how the printed money is used. i mean, why can’t india buy USD with INR from the monetory market??.. Then economics would be nothing but a piece of cake for me. This has been proved time and again, the most recent sad example being Zimbabwe. also we have to accept the fact that none of us will do as same as SA to get inflation rather we can spend to create jobs or to give subsidies for the industries and Factories to manufacture the goods as well as to create opportunities in conclusion everything was created for our well being in simple words “Government of the People, By the People, For the People”. It is actually the same thing, and if you see a scheme like NREGA that’s what the government is doing, and that’s at least partly responsible for the inflation that you have seen in the past few years. This will drastically drive up the demand for ipads in general, but if manufacturers can’t make enough ipads…well then…we know the rest of the story. This leads to higher inflation. WonderWhy takes a look at why you can't simply print money to pay off debt. In the similar way, we can find out that any state can print money and not get rich. I’m sorry I should’ve refrained from making that comment and I will do a full post. - Duration: 10:09. this is in the case of an ipad which is not so essential…but when it comes to our daily commodities think of what happens….???\. So we, Canadians, live in a rich, very rich country. And what has happened when countries have tried to! Now we will take different scenario i.e. money acts as an incentive. Why don’t poorer countries just print more money? http://feedburner.google.com/fb/a/mailverify?uri=onemint%2Ffeed&email. Why? The Federal Reserve, the United States central bank, has “printed” more than $2 trillion since the global economic crisis began in 2008. I remember quite a few years ago, a lot of households started planting vanilla in Kerala because vanilla rates had shot up. my doubt is , why can’t issue more currency to buy goods from other countries(ie, imports)…not allowing currency to circulate domestically in the country …this way inflation can be prevented.. Because other countries don’t accept INR from India, they usually demand payments in USD and India can’t print USD. If possible der is a documentary on National Geographic Channel about the Concept of Money Plz have a look and If possible search on Youtube Bras stack: Speacker: Zaid Hameed. >>>the price of the USD actually goes up because the demand increases for that<<< Countries do exactly that all the time, and what happens is this: The more money they print… By fifth grade, half of the students in India still could not. If your people can buy onions at 5 bucks a kg instead of 50, they are richer by the amount they save and this can be used elsewhere, but if you credit everyone’s account with more money – they will just end up driving the price of onions higher, and that won’t do them any good. Central banks do not even have the power to print physical money … Explainer: why the government can’t simply cancel its pandemic debt by printing more money ... we see capital flight — money flows out of the country … I have read the article and also the comments. | Comments: 0. I feel that we have a tendency to give the index a lot more weight than it deserves when it is up and even more when it is down. PRAYER. USA is pouring paper money into the monetary system expecting the system to use it in creating jobs.This is not happening as unemployment situation continues to be grim.Some of this money has apparently ended up in stock market.I just wonder how?Are the banks borrowing cheap money from Govt and lending it to speculators of stock?Is this permissable under law?Against what security do the Bankers lend?Will this cause a bubble like real estate lending did 3 years back?These are some of the questions I have? In fact, in recessionary times – countries do resort to printing money, or what is known as Quantitative Easing, – a term that became popular just after the recession. After you recover from the mild heart attack this news causes you – you will think that you have become rich, and will start spending like crazy. Very well said, though admittedly we all want to get rich. Favourite answer. take deposits), it does effectively create money because the depositor expects to be able to get the money back at any time, but the bank assumes that most won't actually do this and lends out most of the money to other people. Each country has an economic value and money is just a portion of this. Not every move can be explained rationally and it shouldn’t be too. Until it becomes worthless and destroys the economy. The difference between these two situations is nothing but we have either 100 Rs or 200 Rs to buy this same quantity i.e. countries don’t really print money though. Let me say it again.USA has been pumping paper money in to its economy at an alarming rate.Many experts view this as a big disaster as it would lead to fuelling inflation.Yet since the last two years the CPI inflation rate remains at 2%.Why please.This doubt has not been answered so far.Can I expect some responses? I believe I have answered this question earlier but maybe that was not satisfactory. 260 million children still not in school. Doesn't print note and get rich so they told me it will lead to hyper inflation. This is a theoretical way to understand the consequence of printing money, and you can see a real example of this with Zimbabwe. So, how does printing money cause inflation? 2.15 – you are willing to supply as much as 120 units. Print a bunch of money and everyone gets rich. Before this spree of paper money creation began, the Fed held $950 billion in assets; now it holds nearly $3 trillion. We could buy anything we wanted. The industry necessary for making money is also very demoralising. What I have done here is take an example that’s used with respect to increased incomes, but in this case the increased income is nothing but a handout from the government which has printed more cash. “Why can’t a country print money and get rich?” Once this secret is unfold, their currency may be damp by everyone. ………. That’s fairly easy to do right? New Money . Sir I am sorry for my harsh remark. research “Rothschild”, the system we have under the federal reserve is the same system used around the world today. Feel free to tell your friends that supply curves are upwards sloping. Something of value like gold, silver diamonds, oil; something that the … I will do a full post on this subject, perhaps next week. In order to meet this they start printing money and distribute it to everyone. Some may wonder that why the government think of taking loans from international monetary bodies instead of printing their own currency. In spite of all heavy criticism Ben Bernanke has been pumping in more and more paper money into the financial economy of USA.Stock Market is up.Oil production is up.Corporates are doing well.All positive signs.Has Ben Won? This has more than tripled the size of its balance sheet. Then whom to believe.The reasons given are very credible.Can you please let me know whether USA,s economic position justify the DJ index.I know that Stock Market and country,s economic health need not have a positive correlation but such a negative correlation is surprising .It can be explained only by huge paper money going into the market.Do you have any other reason except telling dont believe what you read. The whole country will be in chaos. Ah, if only it were that easy. Just printing money will also do the same thing. If a country is poor, why can't they print more money and exchange with other countries for goods? If you were to graph this – it would look something like this. It merely causes inflation. Modern psychology seems to back this up, with studies suggesting that beyond an income of $75,000, money doesn't make you any happier. This new changed environment has destructed the equilibrium of demand supply dynamic equilibrium. Printing Money – Can a Country print Money and get Rich? 3. Govt has the option of printing as much money as they want. Hey there Manshu ! The utilization of money determines whether a country becomes rich owing to many reasons or becomes poor … This is another post from the Suggest a Topic page, and while the original comment had a lot of questions about the overall functioning of an economy, I thought I’d take one question from it, and try and answer that in a post. for example. A lot of people have this misconception that a country’s currency is backed by the gold it holds. Here is a link with someone else’s perspective that you may find useful. Before deeming certain goods unaffordable and accusing the government of being parsimonious for not lending you a big fat check, let’s understand how prices are … Think of times when the stock market is booming – people have this “wealth effect†where they feel that they are richer and start spending more, and as a result prices rise as well. For example, think of those special vintage Star Wars toys from the 1970s, which can be worth a lot of money. Why can't we just print money to pay off debt? Excess supply of money feeds into inflation and hence reduces buying power. 2. It’s really hard to get good cash flow in a HCOL city. Poor people don’t profit from the results from their hard work. So we have on one hand goods and services produced in the economy and on the other hand currency to make movement or transact these produced things better and swifter. Regarding DOW, my interest is only general.I read some articles about finance which is theoritical and if I dont understand the practical side I run to you for solution. Can’t a country just print money and distribute that money to its citizens? Hence it requires price adjustment to account for stock splits etc. by seeing some thing been produce by any individual for example someone make pot .. Now the pot have value in market according to value of same money would be printed and given to pot maker …pot would be taken from him some one who is ready to buy pot would given pot taken money…in this way money would be entering…..pls comment. There needs to be some kind of backing to support each dollar equivalent. This will have the impact of shifting the demand curve to the right, and pushing the price of the commodity upwards. Off course this is extreme but it shows the capability of inflation beast. When they buy USD from the market which happens every so often when oil companies need to make payments, the price of the USD actually goes up because the demand increases for that. So the situation comes to the back to square one i.e. I am sorry I cant put it into a Tabular form,though you have guided me how to do it.I am not too computer savvy to follow your guidance. http://www.youtube.com/watch?v=Zx0vrR2BFp8, Hi all thanks for your valuable coments on Money. This increases the fuel prices. 1. Previous post: Thank you and please verify your contest entry. That, to be honest, was the inception of my unwavering love for economics, way before … But, this is simply not true – any country can print as much money as they want, and they don’t need to have any gold to back their currency. The increase in national income will be purely monetary (nominal). In theory it could take a whole truck load of money to but a loaf of bread. So, printing money is not the way to become rich – becoming competitive – producing cheaper goods, and facilitating exports are. Let's go back and look at why money was invented. But this amount of money varies a lot from economy to economy. 100 billion dollar Zimbabwe bank note for 15 US Dollars, http://feedburner.google.com/fb/a/mailverify?uri=onemint%2Ffeed&email, http://theglobalecon.com/printing-of-money/, http://www.youtube.com/watch?v=Zx0vrR2BFp8, Thank you and please verify your contest entry, Beginners Guide to Investing in the Stock Market, A good credit card for NRIs based out of US who fly overseas frequently, L&T Finance 9.35% NCDs – March 2019 Issue, Book Review – Modifying Investor Behavior – It not a Number Game It’s a Mind Game, Muthoot Finance 10% NCDs – February 2019 Issue, Bharat 22 ETF – February 2019 Additional Offer, Cut-Off Price Option – IPO/FPO vs. Offer for Sale (OFS), India Infoline Finance Limited (IIFL) 10.50% NCDs – January 2019 Issue, Manappuram Finance Limited 10.15% NCDs – January 2019 Issue, Sukanya Samriddhi Yojana Calculator, Toll-Free Number & List of Post Offices in Mumbai to Open an Account. That's called inflation. The printed money should be produced in perfect balance with the value of goods and services. I had previously raised a doubt(21-12-2012) about USA printing money. 1 kg of rice. And how would it happen people will demand more if they get money and rices for products will go up. But, this is simply not true – any country can print as much money as they want, and they don’t need to have any gold to back their currency. Then why not over-print … Printing more money will soon greatly reduce the size of this portion and won't have solved anything. Unless there is an increase in economic activity commensurate with the amount of money that is created, printing money to pay off the debt … I’m here to tell you, this is not always the case. The eldest one has gone through the stage of SMS and short calls, and as her income rose, so did her consumption. Get a $20 discounted print subscription today! But, this is simply not true – any country can print as much money as they want, and they don’t need to have any gold to back their currency. You may need only 1 ipad, but there may be people who could never afford an ipad before, but now suddenly can, because of suddenly increased wealth. We could buy anything we wanted. But, this is simply not true – any country can print as much money as they want, and they don’t need to have any gold to back their currency. This is a really nice article. In developing economies like India, Indonesia or china every year millions of their citizens are coming out of poverty. To get richer, a country has to make and sell more things – whether goods or services. Your consumption / demand will generally increase with your income levels. Their boss is, or the shareholders of the company are. 5 years ago. Similar is the case with food articles such as rice and wheat. The country with the largest oil reserves in the world can't afford to brew ... but rather pays foreign companies to print their money … We used to hear that Mr X is earning more than Mr Y. Rich countries should help poor countries. So Mr. X is richer than Mr.Y. But, that measure is only for extreme situations, and is also considered dangerous because printing money causes inflation in an economy, and if you print too much money you can get hyper – inflation also. There is also this belief that these cities are great for appreciation, and you can’t go wrong buying because they will go up enough in value to make it worth it, even without the cash flow. Why can't the government just print more money to get out of debt? Means, money is only printed against an ASSET BUILD. DJ It is ours, and it is rich! It's not so much a matter of how much money a country has, but more of a matter of how much their money is worth. But according to me i will make you understand through an example suppose we have ten mobile phones to sell at 10 bucks and only 10 persons have capacity to … So I don't understand how currency works and why we can't just print more money since it really isn't representative of anything of value. And if other countries accept money from debtor nations, wouldn't they suffer from mild inflation as well since they just added money to their … who controls this? Now the demand is increased for almost all the goods and services because purchasing power has been increased. I am sorry Manoj.I cant follow you. Hi Roy, printing more money will create inflation. Technically speaking, any country on this planet can print money and get rich. Simply put, over-printing of money can (and often does) lead to an inflationary spiral and the devaluing of a country’s currency. / Why Can't A Country Just Keep Printing Money And Become Rich Mature or developed market prints 2-3% of their GDP. Bro U r wrong, there is term known as Fed Reserve Bank. Emerging economy like India has much more than 2-3% money in circulation. What happens when your income rises? 1 and instead of demanding only 1oo unit at Rs. There is a new article posted 6 days a week on the website and you can subscribe to the articles by clicking on this link: Your demand for a lot of things will increase since you have this extra money now, and you are rich. Next post: Congratulations Nisha Malhotra! In the similar way, we can find out that any state can print money and not get rich. 2012—-125 dogsaysmoo. The Fed’s balance sheet has more than tripled in the last 6 years, why hasn’t the Dow tripled? If quantitative easing happened in Australia, the country would be somewhat of a test case. great contribution from all of you to explore and share the knowledge Mr. Manshu has on the economics for the benefit of seekers like me…. 1 . In the process of becoming rich, a country needs to be technologically advanced and more competitive. Ah, if only it were that easy. Bcoz inflation is mainly based on daily essentials. But it seems the American dollar is not a paper representation of the "money in the vault" no one goes to cash in their money in America. I don’t have any knowledge but my brain says that there would any specific path through government would be able to print I see a great example of this with cell phone usage, as I have cousins of varying ages. The monetary system today depend on their GDP growth and productivity. In the process of becoming rich, a country needs to be technologically advanced and more competitive. Newspapers attribute any market move to anything. 2 Rich people get paid based on results; poor people get paid based on time. On the other hand since no technological development has happened or real output has not been increased, aggregate supply of goods and services will remain the same. Since I guess you will also need money to teach the people how to fish, for they can’t afford their own boat, net,and the government should also guard our seas from other country stealing out fish and marine … At what interval is to be printed..daily, weekly, monthly or yearly? we have only 100 notes of 1 Rs and we have 200 people in our country. The reason is that printing money or more money doesn’t improve economic output in any way. Why can't a country just print money and get rich?please explain with some examples.? Why cannot the government just print more money if it is so valuable and "printable"? Value of currency depends on many factors e.g. Japan has been printing money for the last 30 years, why is its stock market 20% of its all time high? On the other hand a lot more suppliers will be willing to get into a business if the end product sells at a higher rate. So now imagine, India as a country produce only 1 kg of rice in a year. presidents have died attempting to print money. – Clementine, age 12, London, UK Thanks for the question, Clementine. I am a commerce student and I am in my final year of C.A. So, let’s get back to our earlier example, and say that instead of demanding 30 units at Re. The Fed tries to influence the supply of money in the economy to promote noninflationary growth. { 53 comments… read them below or add one }. Governments borrowing money doesn't create new money. First of all, the federal government doesn't create money; that's one of the jobs of the Federal Reserve, the nation's central bank. Many countries print notes outside their borders with private companies. A rich country’s aid agency pours millions into a new industry in a poor country, in the hope of boosting its economy, but it never really works. The exchange rate would become so low that they would not get any real value out of the extra currency they printed. Certainly this would alleviate poverty and stimulate the economy. do some research on the history of money and you will draw the same conclusion. Every time someone thinks "Hey, I got this brilliant idea!" If a country suddenly starts printing a lot of money, the actual value of its money in the foreign exchange market will go down (due to its increased supply). I have asked peoples many times why govt. Print a bunch of money and everyone gets rich. Making money from making money is big business. 3 Likes ; Re: Why Can't A Country Just Keep Printing Money And Become Rich by Nobody: 1:15pm On Jun 01, 2016; What primary class are you? here is an excellent video about the history of money. Instead, the truth is obvious: corporations don't exist to create jobs but to rake in money, and most rich people didn't get rich by being generous. Printing more money can't lower interest rates, they argue, and lower interest rates are the primary way that central banks stimulate the economy. $50 african dollars is … This conclusion is simultaneously obvious Printing more money creates inflation and makes the currency worth less. 2011—118 His interest includes Economics to stock market analysis. There are many third world countries that are poor, why can't the government print more money and then trade with other countries to get rich? So I am a person living in India …… what if i want to invest my money some in foreign currency say GBP or so ?? is 'USD price hike' against INR alone or against all the currency in the world??? After all, this would solve the world economic crisis which happened every now and then. First of all, the federal government doesn't create money; that's one of the jobs of the Federal Reserve, the nation's central bank. This shouldn’t be taken too seriously. In our example this will look something like this. The reason is that printing money or more money doesn’t improve economic output in any way. A country proceeds on the path of economic growth by fetching money through higher demand of locally produced goods and services. Why cant they just keep printing unlimited money so they can become rich again. And for that matter... why a country having debt isn't necessarily a bad thing. The government can print money. Anand is an Equity Research Analyst. Why can’t a country print money and become rich? Money, the conventional wisdom says, doesn't buy happiness. in the 2nd case, india can take advantage of it ..right? After all, authoritarianism and extremism don’t arise in prosperous societies — but in troubled ones, which are growing impoverished, like America is … I’ll make it very simple.As he said when everyone are debitted with such a sum of money everyone will be capable of buying an i-pad .in the beginning the price of an ipad were say 25000…now everybody thinks that ipad is essential for them and starts buying an ipad…why cant the person selling it increase the price of it….even if he rises the price(30000) marginally the people wont bother about that …. Pse let us know. Consider the case of the United States. A lot more iPads will sell at Rs. Relevance. This probably happens equally amongst all powers. Hi Roy, Why cant a poor country just print more money and become rich? Why can’t a country print more of its currency to become rich? Why doesn't it just print some and hand it out? So, supply will be high at higher prices, and that curve would look something like this. A lot of people have this misconception that a country’s currency is backed by the gold it holds. There is no fixed yard stick which determines the amount of printed money by central bank. It was a very good read. Canada is our country. Thanks for the information.By price weighted index I thought it was inflation adjusted.It is not.I did a little probe.DJ is calculated on stock prices of 30 companies.It is not on the basis of market capitalisation. Can you please elaborate? 2. “Why can’t a country print money and get rich?” Technically speaking, any country on this planet can print money and get rich. Why can’t a country print money and become rich? This article only provides a general account of why simply printing more money will only invite instability and really absurd consequences. Dear Daniel, It sure sounds like a nice idea. ... even if they can't agree on why. If you used an air conditioner for just the night – you will now want to use it all the time. The Fed tries to influence the supply of money in the economy to promote noninflationary growth. Then the natural question now is why government prints more money when it is not creating any value for the economy. Money is just a piece of paper, confidence, trust and faith is what is all about. Answer Save. Why Not Print More Money? In economic discussion, you may often hear that a government is "printing money" and then picture sheets of hundred dollar bills coming off a printing press. This new/additional money shall only be printed against major infrastructure project or similar requirements, not simply to distribute in public. That is the reason why a country can produce more currency or money when its economy is succeeding. So basically we are talking about total devaluation of currency. In the process of becoming rich, a country needs to be technologically advanced and more competitive. If we print more money, prices will rise such that we’re no better off than we were before. it inspires us to work hard and earn more and fulfill our needs. S&P The only big index today that is price weighted, why pay any attention to it at all? Here's what it would mean and how it works. Rich and poor is decided on the basis of money one possesses. I still dont understand this. When a whole country tries to get richer by printing more money, it rarely works. You would think that money printing machines are with the government and the government has the power to print as much currency as it wants. Thanks for the article. That’s what I found out when I went to visit my friend Robby Rosenman, an economist at Washington State …
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