Will there be bad consequence for printing money?

Question

If the USA Government keeps printing money, what will happen to a typical affluent US citizen in the long term?

Inflation is the wrong answer. As history told us, the Fed is capable of taking inflation under control simply be adjusting interest rates.

The decline of the dollar seems to be a good thing because a week currency gives US companies a competitive edge when they compete with non-US companies. Most affluent US citizens invest most of their money in US companies instead of putting all eggs in one basket: the dollar.

Do you see a problem facing US citizens if the US Government keeps printing money in the future? If so, what are you going to do about it?

To let us understand your answer better, tell us whether you are...
1. A US government official or working for the Federal Reserve;
2. A US permanent residence/citizen (non-government and non-Fed);
3. A non-US government official; or
4. Someone who lives in a non-US country and doesn't work for the country's government.

Rigo: "The decline of the dollar gives no edge whatsoever. Even for the common American -- a trip to the UK for example will shock them to the reality that their buying power in the UK is nearly half off what they can buy at home."

If the quality of two products are the same, would you buy the more expensive UK product or the cheaper US product? Doesn't it give the US *company* a competitive edge? (To answer my first question, assume that you were a Japanese so that your buying decision is based on economics rather than patriotism.)

callum828 wrote: "banks would lose out because people in debt would be able to pay with ease, meaning no profit for the bank."

You're right: "able." Don't forget that there's a big difference between "able" and "willing" though. In reality, many Americans are able to pay off their debt and they choose not to. They spend like crazy out of hedonism and even patriotism. I was in the mortgage-lending and credit-card business for years, and so I know a little about it. You're much better off investing in an American bank than in a Japanese bank because of the behavior (and not just the ability) of your clients.

Given this, do you still think that inflation will be the bad consequence for printing money?

Answer 1

Um..... interest rates are "adjusted" (in your scenario, raised) by reducing the money supply.


So no, inflation is not the "wrong answer" as you somehow claim out of hand ----- if the money supply is increased, interest rates drop and prices rise (inflation).

Answer 2

In answer to Shayna, the gold standard as it is called was abandoned many, many years ago in both Britain and America.

Just look to the hyperinflation in Germany in the 1930s, that is what happens when governments print more and more money.

Also, you don't specify how much more money will be printed. You said that most AFFLUENT American citizens invest in stocks and shares, but poorer families, as well as pensioners on fixed incomes.

Finally, banks would lose out because people in debt would be able to pay with ease, meaning no profit for the bank.

In answer to your question, inflation is the answer, because no matter how the government tries to limit inflation with interest rates, inflation will continue to spiral as more money is printed.

I am not a US citizen or a government employee, just a kid at school, but I do have a basic understanding of economics.

Answer 3

The amount of money printing in the united states is heavily controlled by the treasury to minimize inflation -- also, money must be printed daily because of the amounts of bills that are no longer suitable for use and are burned or otherwise destroyed.

The decline of the dollar gives no edge whatsoever. Even for the common American -- a trip to the UK for example will shock them to the reality that their buying power in the UK is nearly half off what they can buy at home. And their buying power is slightly less than equal in the Eurozone.

And affluent citizens of the US tend to have a habait of putting their monies away in foreign markets, away from the hands of the US Government, so they aren't putting money into the system.

PAINTBALLER: The United States no longer uses a Gold Standard for it's money.

Answer 4

Money doesn't just "get Printed" unless there's real growth, in the US anyways. Simply printing more money to pay debts has been done by certain governments, and inevitably leads to hyperinflation.

In the US, money supply growth is linked to GDP growth, but the topic is more obscure than a simple Q&A can answer.

Answer 5

Yes ... if you research it .. the U.S. dollar bill is only worth about $0.75 because of overprinting ... we do not have enough gold to back it up.... thats why we might in the future be swiching to Oil ...or another natural resouce (valuable resource) that can be cashed in for .. that wont run out fast

Answer 6

Inflation

Answer 7

Money is only printed if there is gold to back it up.

Answer 8

yes

Answer 9

we will become richer and prices will go up. minnimum wage will also go up.