why cannot a country print more money for themselves rather than borrowing from other countries as aid?

Answer 1

First let me correct some misstatements
1 The Dollar is not based on gold, silver or any other precious metal and has not been for over 50 yrs
.2 Dollars in circulation are not directly part of the national debt per say. though the debt is certainly affected

So what does back the dollar you might ask. Simply put the full faith and credit of the united states treasury (that used to be printed on our bills).The value of the dollar is set by the currency traders worldwide as are most currencies in the world today. Some will tell you that it is tied to the GNP but this is not really true in the strictest sense.
So how do the traders determine the value? Well thats where it gets more complicated. since the dollar is backed only by the governments promise to back it up with some type of hard asset one must look at the governments ability to do just that. Since the government's only income is from it's ability to tax the income and goods of it's citizens, business's etc that is where the currency traders look. to set a an initial value. Then the traders take look forward on the future ability of the government to maintain this income. Certainly tax revenue is basically influenced by the strength of the economy in a given nation in this case the U. S. So if a country's economy is strengthening the value of it's currency will trend up barring other influences. the monkey wrench is this, currency traders trade more than just dollars they trade Japaneses yen, British Pounds and all types of currencies. so traders look at the strength of a country's economy and how it relates to other countries economies. so even if lets say England economy is strong and growing if the U. S. economy is stronger and growing faster the traders will favor the dollar over the pound and the dollars relative value against the pound will increase. Without getting too complicated there are other factors that get considered but this gives you the basic concept of how a currency is valued.

So why doesn't printing money work.? well here is where the GNP ( Gross National Product) comes in Since the GNP is a good expression of a country's overall economic health it gives a strong indication of the domestic economy in general and therefore the value of it's currency. now the GNP is a hard number it can increase and decrease over time but the number is fixed in relation to the number of dollars in circulation. To simplify lets say the GNP was 1000 and there 100 total dollars in circulation the dollar would be worth 1/10th of the GNP or 10. but if you printed 100 more dollars and put them in circulation 1 dollar would be worth only 1/20th of GNP or 5. Starting to get the picture? Now it may surprise you that the Government does actually print more dollars sometimes this is called increasing the money supply The reason is sometimes the government does want to lower the overall value of the dollar in relation to other currencies like the pound. While this seems strange at first the reason is if the dollar is weaker against other currencies it makes American made goods cheaper to the rest of the world thus stimulating the economy by allowing us to export more goods. In time the economy strengthens thus increasing the value of the the dollar back up. If you would like to learn more on this look up information on the Federal Reserve Board this is the body that controls the currency supply or how many dollars are in circulation.

Well hope this helps

Answer 2

Printing more money is not a big problem. We can do that. But, it doesn't help our market in any way. Because, it causes unnecessary inflation. Money circulation shall be less than the circulation of goods. What we have to reduce borrowing aid from others is to produce more than the required.If every field observes surplus, the value of money will be increased as the surplus will be exported. When value of money is increased, no need of printing more money than the required except replacing the spoiled notes.

Answer 3

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RE Why cannot a country print more money for themselves rather than borrowing from other countries as aid?

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Answer 4

Probably the taxes that people pay everyday? If we just printed more money into the economy then it would probably make things worse and make our dollars worth less than they are. They couldn't be borrowing it from China because they're actually smart. They give out 150 billion, people still pay taxes on that..if it stimulates the economy then the government will be getting all of that money back. The money soars up, people work more, spend more, businesses make more, therefor the government will get it back through all of the tax money that will be spent from everyone. The better off the economy is, the better off everyone is in including the government.

Answer 5

Printing lots of money might make sense to you, but making lots of socks wouldn't. You wouldn't think that building hundreds of new sock factories that make socks that are not exported would help your country. The people in your country might have socks, but they still lack clean water and good health care, the two major problems that face 50% of the people in this world. Having socks in their drawers won't reduce the need for the essentials; printing money won't reduce the need for the essentials either.

http://en.wikipedia.org/wiki/Fiat_money A country may print currency, "fiat money", which in itself is not valuable. If a country prints more money, it is saying to the people that the printed money is good for paying taxes with. Soon even the people in the government won't be happy. They will collect a lot of worthless paper for taxes.

Eventually, people will stop being confident that their money is valuable. They will try to go to the bank to get something for their money. Nobody will want to have the worthless money. http://en.wikipedia.org/wiki/hyperinflation Printing money freely will lead to a condition known as hyperinflation. In Germany in the 1920s prices doubled every two days. Where one wheelbarrow full of money could buy one onion one day, two days later you'd need two wheelbarrows of cash. It should be noted that excessive borrowing will also cause hyperinflation, so neither printing a lot of money nor borrowing from others can get you out of your hole unless you are able to start your economy working--you need industry and exports.

Answer 6

Money in and of itself is worth nothing. What gives it worth is what it represents which in the U.S. is gold(i.e. the gold in Fort Knox I think) or in the UK I believe it is silver which has to do with the whole Lb. sterling thing and what other countries use I don't know. If you print more money than what the gold/silver is worth in your countries reserve that makes the money worthless and severe inflation occurs. Sometime in the WW2 era Italy tried your idea and their economy all but collapsed. I once saw a picture in a history book of an Italian woman with a wheelbarrow full of money that was headed to the local marked just to buy a single loaf of bread. This type of scenario was pretty typical at that time.

Answer 7

If you print more money, then you reduce the value of all the money already existing and you have terrible inflation.

Rather than borrowing from other countries, why don't we just SPEND LESS?

Answer 8

The more money in circulation mean the less that money is worth, so it really serves to just increase inflation if a country prints more money. The fact is, its is GDP and gold that currency is based upon, and those things need to be increased before their economy can be bettered

Answer 9

Good question.....simple answer.

If a country just prints off more money...INFLATION would rise to unimaginable levels. Costs for basic goods could rise 20%, 50%, or 100% a year!!!

Answer 10

Cash in circulation is part of our national debt. So are savings bonds. We also owe a lot to foreign govts. It's more complicated that it looks.