Why can't a country just print lots of money and it will become rich?

Question

What is money and what is stock actually? Thanks.

Answer 1

In layman's terms, the physical wealth of the country is represented by the amount of money they print...

If they print loads, then the worth of the $ would be diluted...
If they print lesser, the $ would be stronger...

So on the global exchange rate, it would be worth very little...


But of course, there is more complexity to that.. as in the economy, how the countriy's $ is pegged or floated against another particular country or group of countries.. but this itself takes a whole longer post...

Answer 2

Money is not just pieces of paper - they are backed by actual assets and governments implicitly promise provide the asset backing the currency. Previously, many governments back their currency with actual gold reserves (hence the gold standard); Singapore back the dollar with actual foreign currency deposits, etc.

You can print lots of money, but these money will be backed by the same assets. So more dollar note backed by the same assets which does not change in value means that the value of each dollar falls.

For example, let's say the S$ is backed by 100 bars of gold and there are 100 S$1 notes in circulation. Similarly, there are 100US$ notes in circulation also backed by 100 bars of gold. In this case, S$1 = US$1.

Now if we print another 100 S$1 note, there will be 200 S$1 note backed by 100 gold bars. In other words, Each S$1 note is not backed by only 0.5 gold bar. Hence, S$1 = US$0.50.

That's why printing money does not actually create wealth. It may put up an illusion of wealth in the short run, but in the long run, the currency will depreciate.

Answer 3

It is bad finance. Having lots of money stock in the economy will initially create an illusion of wealth, but eventually the value of each money unit will drop and the purchasing power of money decreases. This is when prices begin to appear high, because people will demand more money for perceived depreciation of the value of money. When this spirals out of control, the situation is called hyper-inflation. This is especially risky in the global economy, as the value of the country's currency depreciates against foreign currencies. The balance of payments (costs of imports calculated in foreign exchange) will suffer, adding to the ill-effects of hyper-inflation within the country.

Answer 4

if every country can print out lots of money in each day, this has mean that the money already lost the value and became banana money.. Quantity of money s not important , but the quality of money is important. On the other hands, if they print out too much of money, where they have to keep it and will get stolen by other country. Every country has their own rule, dont ask why ...i also dunno why:P

Answer 5

The more money u print, the lesser the value gets. Jus recall the Japanese when they invaded S'pore. They printed so many "Banana Notes" until the value drop and it became worthless.

Answer 6

money is not just printed paper.. every country has to pay some value (such as gold) for every new addition of money in economics..
if u print money yourself, it will harm country's economic structure badly.. value for that currency will go down and then everything will be costly for that country to import goods..

this was a lil illustration

Answer 7

Because the more money they print the less it will be worth

Answer 8

that would cause what we call a rise in inflation,thats baddd...... get this ..if a pen is worth usd2 after a rise in inflation the same pen may be usd 200.the value for money becomes less.

Answer 9

paper money has to supported by gold reserves... to honour its value other wise it is just that - paper! thats why it is controlled by the bank - they hold the gold and circulate the currency

Answer 10

Ink, the darn photo copier runs out of ink.