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.

A country could do well by giving the printed money to those with high chance of success in their field of endeavors. They should be those who will use the printed money wisely/prudently by investing it businesses that do not cost more than the solutions they provide. And the problems the businesses seek to solve should be serious problems that are in high demand of solutions. This should somewhat increase the likelihood of the business paying back the printed money.

And I'm not so sure as a teenager you think that way. I mean, teenagers' minds are still quite contaminated with sensitive thoughts like this, even in lower middle school, if the teacher asked what your goals were when you grew up, what answer would we give, of course?

• President

• Police

• Doctor

It is only in this scope that our young generation is contaminated with the thoughts you convey. Although I don't really know, you are one of those young people who think so.

When you start to grow older, which may have gone through the level of diploma education, the answers to your questions above are very easy to answer yourself.
To print the amount of money in a country, there are legal regulations that regulate the amount that can be printed, these regulations are binding and cannot be violated, to better understand these regulations, maybe you can search on Google, although different countries have different regulations.

Inflation is not affected by the printing of money, but rather because the money supply is not in accordance with the usual, there is no correlation between printing money and inflation.
Because indeed the printed money has gone through the approval of the required amount.

In this paragraph I think you are wrong, being a billionaire or a rich person needs many things to pay attention to, what steps to take, business, investment or other forms.
You can successfully increase your source of income, if you have the ability, skills and are consistent with what you want to achieve. While the State cannot provide any guarantees, the services provided will not be able to reach all levels of people, but simplify services, train resources more appropriately and enable them.

When I was also a kid, I've thought of that and will just copy and print everything and boom, I'm rich. But understanding and learning economics, that's not how it goes and it's harder than I can imagine.

Just like what US and most countries did at the height of pandemic, there's so much cash in the economy and that had made an impact and I think that's also one contributor to the inflation that we're experiencing right now, not just all about the increased interest rates.

Many countries do in fact do this and it is a very fine balancing act when they do. On the one hand, if their exports get more expensive then people try to source goods from different countries instead, however if they print too much money then investors might conclude that they have bad fiscal policy and stop purchasing debt which props up their ability to keep printing money. It's only really America, with it's fairly stable market economy and the country which controls the primary reserve currency of the world - the Dollar, that has much more ability to get away with it. Other countries have bought so many dollars in the past that they are actually stuck if they try to sell it off in large amounts and also see it naturally devalued over time as more is printed.

I put a little quote in an article I read about the bad effects of printing a lot of money.


not all countries are able to withstand hyperinflation if they print a lot of money, especially for countries whose currencies are not in demand and have few foreign investors. but the dollar is different, it is an invulnerable currency and has many international transactions so that makes it strong even though it is printed a lot, cmiiw.

This is the high point of your contribution and this is true about more less developed countries. Man power exportation while the countries that having strong economy have diversify into more technology and software not reliable only on naturally resources but have move away from there. But the difference to the exchanges done is the man power from less developed countries are regarded as unskilled but those from developed countries regarded as skilled and expatriate.


I learnt this also in elementary school and higher your foreign debt the more depreciating of the home currency

Post industrialization worker productivity rose significantly. The lavish lifestyle billionaires enjoy today, was only made possible through technologically sourced increases in average worker productivity. Millionaires and one percenters in pre industrial times did not enjoy nearly as much excess or high standard of living. We've seen an explosion in the number of newly minted millionaires and billionaires with silicon valley and dot com tech bubbles.

In theory, there is a point where productivity rises to a point where standard of living rises dramatically.

Another interesting facet to the dialogue is increases in production also fueling a massive explosion of human population growth. In the 1950s the human population was 2.5 billion. Today its near to 8 billion. In close to 70 years we have seen the population on the planet triple.

Japan could have the right idea for pursuing a sustainable and healthy standard of living through low birth rates and negative population growth.

Rising productivity gives us a larger margin for error in terms of economic policy, as it invokes greater wealth and larger margins. It may also be correlated with longer average life expectancy and other benefits.

The main export of countries in africa is cheap labor. While the main export of silicon valley is software. I might contend the wealthiest nations export the most valuable assets and commodities. With low(er) birth rates contributing towards productivity and wealth not being diluted.

Perhaps you can now tell those who are clever right from their mother's womb OP
I think the difference between the above posts is, one took an economic route for explanation and the other took the laymans term to explain easily, and both definitely arrive in same conclusion.
And for a country to be financially sound, it must be producing different commodities for export to earn foreign currency to boost the countries GDP overall.  

We are now saying same thing. If a country is trying to get rich, diversification is part of what to do and not to rely only on limited income generated in the past. Just like an individual a country also need growth in the current development to stay relevant and increasing the resource revenue also increase the GDP and good living.

It looks you didn't understand my view of the topic.

Edit : I change topic from Being rich and a country compared to, Printing of money doesn't make a country rich but to diversify like a person

It seems that your idea of what wealth is now is clearly better than it was before, although I think you are still a bit of a mess.

Indeed, to give you an example, having 1 million dollars is of no use to you on a desert island. And the same applies to having 1 million dollars in gold or bitcoin private keys on that island.

On the other hand, if you have 10,000 USD (100 times less) in a city that has a lot of goods and services for sale, you are much richer than the one on the desert island with 1 million.

The total goods and services produced in a country in a year is the GDP and is a measure of wealth, although this is rather like household income, net worth would be the accumulation of capital in its various forms.

I remember while growing up I thought of it that it only take printing of money to be rich and wonder why country just don't go ahead and print all the money it can by making order to the minting company to print money and just jumb into the number 1 richest country lol.

I don't know how many of us think that way while growing up but I think some will say nah, I didn't think that way. They will say I know better even from my mother's womb and claiming to be smarter than the elderly at those times but surely I admit the forum is giving me much challenge to research more to add up to my knowledge.

Now the reality is coming clearer with my elementary school economics sharpened up, thanks to the forum because I now read comments here taking me to study and research more to be better.

The main comparison is here. Like a rich person don't take up just one type of job, he/she is involve in different resourceful jobs or more than one job to be rich, doing just one job you may be comfortable although but is better to do more jobs. So the country that want to be rich will have to produce more products and not to rely only on one limited product or few source of revenue. A country need to produce variety of goods to increase GDP and standard of living and have excess to export and have good external reserve. With the countries of the world now, we know the richest countries are those having more resourceful means of income and they have use it to build their economy. The list is endless from those rich in technological export, oil export, health, agricultural products etc with good management of the resources.

If a country rely on just printing of money that will lead to inflation and hyperinflation which Zimbabwe is one country as example of such inflation. Printing of money will increase money circulation and price will increase at the mention of printing of it (money). Being rich is to increase your source of income and countries can increase what they produce or services provided and that is how to be rich.

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Not to say printing of money is totally bad but if not controlled properly it can lead to hyperinflation.

Circumstances that money can be necessary to be printed is when the country is in short of money because they need money to build industries, give loan to manufacturals and small businesses.

Countries starting up like new independent countries can print money to start the economy properly.