if our government can print out money then why is the usa in debt?

Question

cant the govt just print out more money and slowly get out of debt plus the govt could help with the poorer schools.

Answer 1

The answer is complicated.

Basically, a dollar bill is not real money - it is an IOU. It has no value other than people who have them know it will be honoured by the government.

Imagine you had $100 in your savings account, and you gave 100 friends an IOU for $1 each. If each of those 100 friends all came and wanted to cash in their IOUs you would have enough money to pay them all.

Now imagine you had $100 and you gave out 200 IOUs for $1 each. If they all came and wanted their money - you would not have enough to pay them - therefore, you would have to give them all 50cents each.

As you can see - printing money (or IOUs) does not make you better off - it simply dilutes what real money you have.

The more paper money that is printed, the more that national assets are diluted (such as the Gold Reserve and the balance of trade).

Therefore, printing more paper money does not really solve the problem - it simple dilutes the country's real wealth.

Sorry - I am an economist by training and it is a very difficult concept to explain, but I hope the answer gives some indication.

Answer 2

Just guys are a riot...LOL :)

Because the money is actually an I O U or a promissary note. I could write you an IOU and it would hold up in court but the IOU as being like money, but it has to be backed by something of value. So money has value as promised by the government, but the value of that dollar, or how many goods you can buy with that dollar, actually fluctuates up & down. The total value of all money printed is a finite amount. So the more money, or IOU's, you print for the same total, the smaller the value of that money.

Like your total treasury is a pizza. You cut it into slices (money) to make more money, you cut smaller slices. Now before 1 big slice would have filled you but now the slices have so little value you need a lot more slices to fill you. The more money you print, the less value it has.

Gold has not been the main backing of our money in a long time. It is now backed by goods & services.....or more promises of it.

Answer 3

The more money the government prints, the less each dollar is worth, so if they printed enough to get out of debt it would ruin the whole economy. As for poorer schools, if parents don't like the schools they should home school their kids and save them from being victims of inferior public schools.

Answer 4

When they print out more money, the value of the money already printed goes down, causing inflation to occur. This means that consumers will have to pay more for the goods and services. The value of the US dollar will also go down worldwide, because the dollar isn't being backed by more gold (the worldwide currency, more gold = more money), the government would just be printing off more paper. Yes there's more physical money, but the value of the money decreases.

Answer 5

The US is in debt to other countries, and printing more paper money (that is not backed by anything but consumer confidence) won't work. These other countries want something real- goods, services, etc.

If the US were to print more money, all that does is de-value the US dollar- there's still the same amount of wealth, resources, assets out there, it just takes more George's to buy it...

I almost want to suggest you take a world economics class...

Answer 6

Take economics 101.
Currency is just an representation of what it suppose to worth. In the U.S., it used to be a dollar worth of gold per dollar. And after Nixon took it to an non-backed currency where it's basically the people trusting the government backs the dollar. If not, then you can have the next Panic of 1827.
And over printing would make more dollars to what already gold we have to back it up. And the dept is not only domestic, but international. We couldn't just print paper money and give it to the French during the Revolutionary War, it has to have the gold to back it up to the extent of what they expect to recieve.
But I'm not an economics mongel, so I can't explain it as well.

Answer 7

Most of the intelligent answers provided by other people here are correct, if the government continuously prints money, the economy will go down, the price of things will go up because money means even less, and if the new money was evenly distributed, the rich people would still have the same amount more money than poor people.

Answer 8

They make money that has no value, then someone borrows money on which you or someone pays interest, so when they interest coming in, they make more play money. We only have one big IOU, there is no real money, its a huge pyramid scheme. We owe 3/4 of our national debt to China, that why we buy lousy unsafe dishes with mercury in the paint and the gloss that poisons us and our kids. :-)

Answer 9

Because if you print too much money, it becomes worthless. Germany in WWII printed money like that and people had to use a wheelbarrow of paper money just to purchase a single loaf of bread.

Answer 10

Read you history. This is basically what happened to Germany after WWI. Inflation was so bad that people carried money to the store in wheel barrows....