Topic: Printing of money doesn't make a country rich but to diversify like a person (Read 338 times)

It seems rudimentary to not print an endless amount of money in order to stimulate the economy, yet nearly every developed country in the world decided to shut down their economies in 2020 and print money in lieu of people working. And there are people surprised that the inflation rate for most currencies is ballooning to rates not seen before.

This is why diversifying the countries assets other than printing money is very important. For example, gold bonds,  government PF money, and other stable reserves which are locked away for years to come and thus they make up good amount of reserves and could help country from inflation kinda situation.

Other than this, countries relationship with overseas businesses matters a lot and I mean this one. Just take how Germany is crippled when Russia cut off their trades with them. Being highly modest country, Germany is now helpless and getting tangled up in recession more and more.

I hope current studies can provide more info on this. Printing money is short way out through difficult situations but not permanent solution. 

The problem nowadays they have is that even though governments have all the right to print as much as they want to, if they do that then their money will become less valuable and the people do not have to use it. I mean I can easily just turn all my money into crypto, and try to live like that, if I have to spend cash, I will instantly turn that crypto into cash based on how much I need, and keep the rest in crypto.

This way I will always protect my money against the devalued fiat. Governments need to make their fiat wanted, so that people would want to keep it, if they don't do that then you will see people leaving that fiat and it will be even worse if people do not want to have any fiat.

I agree with the op that a question why countries can't just print more money to be rich is a common, natural one for a child. To me, the answer why it doesn't work is in hyperinflation examples: tons of worthless money. Why it becomes worthless? Because there's too much of it, while the demand is on the same level as it used to be. Thus the value decreases. But in reality it's more delicate, and, as the op mentions as well, printing money isn't always a bad thing, especially if done carefully. The difficulty rises also from power relations between countries and inability to properly define prices and production to become a rich country even if you have plenty of natural resources or something else you could really capitalize upon.

I used to have the same perspective as you when I was younger. Why doesn't the country just print money and distribute it to everyone? As I grew older, I discovered that this was not the case. One good example was given back then: if everyone has money, who will go to farms to cultivate lands for food, and who will go to hospitals to treat sick people? The answer is none.

The major point of working is to earn money to spend, but after we have the money, there will be nothing to buy with it because no one will produce or make new products because everyone has money. This type of circumstance can be related to the inflation rate you described in your post.

It's very clear that excessive printing of money my a country doesn't solve their financial and economic problems. I don't know how correct I am but I think there is a standard amount of money a country can print and it should be in line with the economic situation of the country and their GDP .

But this isn't to say that some countries don't mess around with such fantasy, a country once reached their money print limit to fight inflation all this just did was cause over flow of money rendering their currency worthless and could be found even littered on the streets.

My own country currency is falling at a disturbing rate but what the government can do is try to change the note of the currency being printed, this would not solve any economic or financial issues too.

Countries are not supposed to print for any reasons as you mentioned they should only print what resources they have for a while gold only considered as reserve later countries changed their policies.

Still why countries are printing money? They want to have cash flow without actually creating the demand they are simply producing it for temporary solution.

You are combining different illustrations which contradicts your points. AFAIK, the government doesn’t make an announcement when they want to print money, sometimes it is the insiders that usually leak those information or officially if it’s actually necessary most often as post events to avoid players from manipulating the market.



Printing of money isn’t the best way to manage a capitalist economy but Central banks just can’t help the fiat system monetary, that why they print more and more and hence the reason why people are always against the use of fiat as sovereign as financial instruments, Bitcoin may have its own demerit to solve the problem of fiat but fiat is the worst solution ever adopted in the history of finance if you asked me, gold is even fair in my opinion.

You thought like this because you didn't know much about economics. Even I as a kid used to think why didn't everyone just print money and buy things, but wasn't bothered much about it for some reason lol. No printing money doesn't make a country rich. The more money you print, the more money goes into circulation, the more value the money loses.
If done in a controlled way, it will only reduce the damage it might do, but in the long run, it will eventually affect the economy. And there are lots of things to see before giving loans to manufacturers and industries by printing money. The government first sees how much increased economic activities the industries can bring before they actually do it. If they print money and keep on giving loans to failed industries and business, it will only cause inflation.

And they think they can get away with it easily once their term ends? Many government officials are like that on the past but they always ended up in the jail for not doing their duties properly. I think there are still other things that they can do which are more safer than printing a lot of money.

@OP, you are not alone with that. I think all of us have think of that when we are still a kid and we don't have a good knowledge yet about how money works but for me, my views about this change by the time I hear the word inflation. I then got curious and research anything about it. Now I am fully aware that continuous printing of money isn't really good for one's economy.

One of the fundamental properties of money is scarcity. Money must be scarce in order to have and retain some value. So, if a nation decides to print out billions and trillions of it’s currency, it is making the currency more useless than it already is and soon, there would be more money in circulation than goods and products in the market.

Printing more money doesn’t make a country rich. A nation must first have several sources that brings in revenue; it must also export goods and services more than it imports. This would greatly boost the economy of the nation, thereby making its currency valuable locally and internationally.

Diversification plays a key role in sourcing for several sources of revenue.

Printing of money doesn't make a country rich at all, instead, its aim is such as to improve the economic standing a country. Cases like this is supposed to occur when there is deflation, a very limited number of a certain currency in circulation or when the currency notes are bad beyond use.
However, for new currencies to be printed, those who manage the economic affairs of the country sit and deliberate carefully as to how the process should go. Devalueing of the currency is one way to check  or counter such printing, if it is in excess.

This is precisely the reason why there are economists and financial planners. If economics is such a simple thing, countries would simply print more money and everything's good. But that's certainly not the case. Countries are responsible to increase their economic output without which their abundant money supply wouldn't mean a thing.

The value of money is founded on its economy. If a country prints more money than its economic performance, prices would only increase and the printing of money would be useless.

To illustrate it simply, if a kilo of rice is $2 and the government prints a lot of money without improving the agricultural sector and consequently rice production, a kilo would, say, rise to $10. If it continues printing without doing anything, a kilo rises to $100. Printing goes on, a kilo goes to $1,000. More printing, a kilo hits $10,000. This will go on and on until a kilo is worth a million.

This is what happened to a few countries like Zimbabwe. Too much money printing without any economic improvement has brought them hyperinflation reaching to as high as 500,000,000,000%. Neither the government nor its people didn't grow rich. What happened was that an employee with a trillion in salary per month cannot even buy his basic needs.

In contrast, if economic output is improved and there is money printing, the value of money is maintained even if the circulating supply increases. Prices may grow but only moderately and yet people are earning more. This is what economic development looks like.

Even though the state has full authority to print money, the state cannot just print as much money as possible. The more money circulating in a country will lead to inflation and the greater the burden on the country which can make the country's debt increase.
The central bank of each country must keep the value of money stable. If a country prints as much money as possible, it will affect the exchange rate of the currency causing the exchange rate
getting down. The amount of money in circulation affects the exchange rate of foreign currency, which is why the state does not print too much money.

Printing money is usually what a government does whenever they have problems with the inflation rate to have a short-term cure but that's not actually a cure for them because after doing this their fiat currency will lose its value against many assets this will also make everything hard for the people to supply food, which is all the government usually do when they fall into the trap. While that's the reason why most people trust bitcoin to have a limited supply and none can change or print more bitcoins.

Remember what happened to Zimbabwe? Their currency basically had no value at all due to the sheer amount of printing of money. The increase of supply in the money basically made it worthless to the point that their currency was denominated as "one hundred trillion dollars."

Like what you mentioned, if the printing of money cannot be backed by an equivalent of gold reserves or resources, then you are just decreasing the overall value of your currency which will make the economy hyperinflated.

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image taken from: https://www.worldatlas.com/articles/the-story-of-hyperinflation-in-zimbabwe.html

Every printing of money that is not backed by an equivalent reserve increases the inflation of that country. There is no escape from it. Especially during the pandemic period, the aid packages announced by the countries again led these countries to print money. They also know that when they print money, inflation will increase. The real problem starts here. They are moving to save the day. They don't want to think about what kind of damage will occur in the future. Many countries have to suffer the consequences for printing money. And many countries will not be able to cope with it.

Printing more money should not be done without having an equivalent gold reserve or major currencies that are in turn backed by sufficient gold reserves (some other precious metals can replace gold, the purpose is to add value to money more than just ink printed on paper).
Some governments in different countries resort to printing money in certain circumstances, which are often similar to the dance of a slaughtered rooster. The remnants of printing money arbitrarily are always inflation that is not difficult to correct.

Printing a lot of money is an attempt to solve the current problems in the country, but at the same time they do not think about what this may lead to in the future. Or they know what it can lead to, but they count on the fact that they will no longer be in the government until then and other people will solve these problems. In any case, it will just lead to a lot of inflation and in the end they will be able to say that this is how it always happens.

If you are not knowledgeable think like that is a natural thing especially when you are not mature, even in this world many officials who should know how dangerous printing money excessively still think it's the right step and they do it, today countries that print money excessively end up being in a deplorable condition, they just think it's easy to have funds that can be used as funding.