why don't we just print more money?
i have heard a lot of explanations about this on tiktok but i still don't seem to get it. everybody has been throwing the word 'inflation' but i still don't seem to understand it pls help
- 2 months ago
Inflation means there is too much money to spend and not enough to buy. Does that sound like we need to print more money?
I'll explain it in a simple term. The value of money is determined by the market. What that means is that stores and the general public decide what money is worth. If a tomato is sold at $1, but then there is a lot of money in the market, the store owners can all decide ''let's charge $2 for a tomato'' so with time every tomato seller starts selling tomatoes for $2 so now 1 tomato is worth $2, so in essence the value of your money went down in half. Before you could buy 1 tomato with $1, now you need $2 for that same tomato.
It is hard to determine the value of money, every bank has their own exchange rate of foreign currencies. Most organizations use the Big Mac Index to determine the worth of money. The Big Mac Index is literally the value of a Big Mac burger in that country. Big Mac burgers are made with products which are pretty standard in most countries so it is a good measurement of the currencies worth.
Venezuela kept printing currency like crazy so all the stores said ''there's so much money in the streets we can raise the prices because boulevards are everywhere'' so the value of their currency kept dropping, now it's worthless. 1 tomatoes is literally worth 5 million boulevards [their currency].
Money does make a person wealthy but a country is only wealthy by what product or service it produces [by economic activity]
- JuanBLv 72 months ago
Because the rest of the world is wise to you. If the world deems your country is worth $100, then it is worth $100. So if your print $1,000 of money, the world still knows your money is only worth $100 in total. If you print a million dollars, the world still knows it is only worth $100. Meanwhile it is you holding $1 that first becomes worth 10Cents then a fraction of a cent.
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- ZirpLv 72 months ago
Because we leave that to BANKS
When GOVERNMENTS have printed money, greedy companies knew this, and raised their prices to insane levels.
So now we have BANKS creating money in the form of DEBT/CREDIT, and demanding INTEREST... and we pretend that that does NOT cause inflation.
Now recently (2018?), the European Central Bank has created 80 billion euro per month in an attempt to deliberately cause inflation - and failed.
The high priests of the mammon ("economists") aren't smart enough to understand that money that lands in the pockets of those who have no reason to spend it does NOT cause inflation.
Even if it had been evenly divided, as in every EU-citizen receiving a few hundred euro, it probably wouldn't have caused any inflation. If a retailer sells more items, and has to discard fewer, (s)he has more income and lower expenses already
I don‘t unterstand your just print. No economist can do since he/she has been in 101. It is about the government, not a child. The government cannot just do anything.
When people have more money to spend, stores raise their prices.
But the extra money isn't distributed equally or fairly. The government might be printing money to pay for jobs like repairing bridges, but if you aren't employed by the government, your salary doesn't increase at first. And the money in your savings account certainly doesn't increase. So those rising prices are very bad for you.
The politicians who decide whether to print money have to strike a balance between protecting the buying-power of voters' bank accounts and the fact that that bridge really does need to be repaired.
The more money you print the less it's worth. Too much of anything takes away it's value. If they printed a mountain of money and everybody gets wheelbarrows full then one loaf of bread would cost a million dollars.
The government does "print" money (and I do not mean green pieces of paper). Every time the government sends out a check (or electronic deposit) without the tax dollars in the treasury the government is printing money. The stimulus checks were "printed" money. Many credits people get after filing their income tax forms (child care credit, college tuition credit, Obama's used car credit, extra child credit, etc) is fake money. Individuals print money when they use credit cards, but, unlike the federal government individuals have to repay money they borrow. Inflation is when costs go up without a corresponding increase in productivity or true value. The hamburger will be the exact same hamburger, but cost more when minimum wage goes up to $15/hr. If 2 people at $15/hr could produce more hamburgers per hour than 3 workers at $10/hr then productivity would go up and prices could actually come down.
- Michael MLv 62 months ago
Let's say people in a country have a total of 1 billion dollars. If you print another billion dollars and give it to people, now there is 2 billion dollars, because of competition, stores will double their price. Even though everyone has twice as much money, they can only buy the same amount of things.