2006-07-15 18:30:55 · 13 answers · asked by azharuddin_mhd 2 in Social Science ➔ Economics
I was wondering the same thing myself, but when I asked anyone this question, this was what I believed to be the answer: If a country could just print more and more money, then it gets out of control and the economy is corrupted.
2006-07-15 18:37:47 · answer #1 · answered by martin925 3 · 0⤊ 0⤋
Yes, it could do this, and it has been done in the past. The problem is inflation.
The more currency you put into circulation, the less valuable it becomes, which drives prices up to compensate.
It is all very complicated, but the bottom line is, if the currency is not controlled, or if the public has the PERCEPTION that the currency is not controlled, it becomes devalued. Printing more currency will create financial ruin for a government.
Basically, the idea of money is a 'concept'. For example, the USA used to print currency that was actually 'worth' silver or gold. But several years ago, the USA stopped backing their currency with gold. Today, we have 'promissory notes'. The US government promises to cover the currency, but has nothing of real value with which to do so, except the stability of the government itself. Scary, huh?
2006-07-15 18:51:40 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Actually, they sometimes do exactly that. There are consequences to doing this however. Look at it this way. If you found a diamond in your backyard, it would be worth quite a bit because there aren't that many diamonds around. Value is based on how much people want it combined with the rarity of the item desired. If everybody started finding diamonds in their back yard, they wouldn't be worth that much. It works kind of like that with money. When there isn't that much of it around, it's worth more. When there's lots more of it, it's worth less. If a country started printing lots of money, the value of the individual unit of currency goes down because there's more of it. In the short run, some countries do this to get out of a short term financial bind. In the long run, however, their currency becomes devalued because there's nothing supporting the increase in money in circulation.
2006-07-15 18:45:07 · answer #3 · answered by Dave1001 3 · 0⤊ 0⤋
all currency is backed up by something of real value... The US has a gold reserve... Say for argument sake the US has a trillion dollar worth of gold and we have a trillion dollars in paper money. Well if we were to print a trillion more dollars of paper money then the actual value of that money would only be half of what it was...
when countries trade with each other they have a currency exchange... if you look at some nation like canada you'll find their dollar is worth less than ours and if im not mistaken the british dollars is worth more than ours...different dollars are worth different amount because of the REAL VALUE backing that dollar...
email me if you have need more help
2006-07-15 18:33:16 · answer #4 · answered by Grin Reeper 5 · 0⤊ 0⤋
Germany tried that after World War I and saw hyper-inflation.
Basically, when you print more money, you make the value of the existing currency less, so the prices of goods cost more.
Not a good thing
Also, currency in the US is NOT backed by anything any longer. That's why on US currency it no longer says "backed in gold" but "In God We Trust".
2006-07-15 18:35:02 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Usually a country will have gold reserves to backup their currency, If a country continues to print and print money without reserves to back them up, it is unlike printing money over your printers.
It woud be worthless except for the cost of paper and ink.
2006-07-16 00:17:01 · answer #6 · answered by JP E 4 · 0⤊ 0⤋
Although I am not good at economy,I know not any country could
control money by printing the currency through its economical power.Why?Because every thing has its limit and rule.
2006-07-15 18:48:19 · answer #7 · answered by Anonymous · 0⤊ 0⤋
because the government says i have this much in physical assets and this piece of paper is worth lets say one dollar of that stuff but when you print more money that same dollar is not equal to as much stuff
think off it as exactly like if you use silver coins for money if you put lead in that silver so you can make more coins then there is no longer the same amount of silver in the same coin so it is worth less
2006-07-15 18:34:17 · answer #8 · answered by pchardbooter 3 · 0⤊ 0⤋
You are supposed to back your currency up with gold. If you make money without having the gold, your money becomes worthelss and you go into debt.
2006-07-15 18:33:52 · answer #9 · answered by ekaty84 5 · 0⤊ 0⤋
Actually it all depends on the gold reserve of a country.
2006-07-15 18:33:48 · answer #10 · answered by Rinky 2 · 0⤊ 0⤋