why can't the world just print more money?

Question

Theres always things in the news about closing down hospitals and that because their so in debt? Why can't we just print more money to help them out?

Answer 1

Money cant just be printed because we feel like it. We have money because we have gold. No gold no money. It has to be backed up by something, sort of like collateral.

Answer 2

Nowadays money is not supported by the gold reserves of any country even though that represents the savings of the country. Money nowadays is supported on "the trust" in the economy of the specific country. For that reason this instrument is also called as a fiduciary instrument. Fiduciary is a word that comes from the root of another word, this is “faith”. But faith on what? Well, "faith" in that the country which issued the money is doing all the necessary for keeping their economy healthy and productive. In other words a country that is keeping a policy focused in one objective mainly: to generate higher level of production each time (continuous and sustained growth of GDP). As a consequence, it can be said as a simplistic but not wrong explanation that money is supported in the production of the country. If the production is high, it is possible to "print" more money (for that reason the stronger currencies are from these developed countries with higher level of production); if not this "print" would produce inflation because the new money is not supported in more goods. And more money without the necessary level of goods push the prices up. In other words because of the print of money the demand would go up but the supply not. When the demand goes up and the supply of goods keeps static or reduces the only consequence is that prices go up (inflation). For those reason stupid governments in the past in Latin America without knowing or neglecting this fundamental economic principle, printed a lot of money and the final result was hyperinflation, devaluation and in certain cases they lost their currency such as Ecuador that today is dollarized.

Answer 3

Basic principle of economy - a thing is worth what other people are willing to pay for it.

Money represents what you are willing to pay. A dollar bill is a piece of paper unless someone else thinks it has worth. It used to be that we had silver certificates, dollar bills with a small wire of silver actually imbedded in the paper. It used to be that you could take your paper money to a bank and exchange it for real gold.

So today people accept the dollar as something of value because they believe - rightly or wrongly - that there is gold backing up that piece of paper. If people STOP believing that - if people STOP believing that others will accept paper money, it will become worthless. And if we suddenly print a whole lot of extra money, that's exactly what will happen.

Same thing with a bank. No bank has on hand the total amount of cash people have deposited. Everyone assumes the bank is safe, so people trust their money is there. If everyone suddenly decided to withdraw their money all at once - the bank would have to close.

Answer 4

Simple supply and demand. If the world was to 'just print more money' then the supply of money would go up faster than the demand and the value of money would plummet which would cause worldwide inflation.

Read about what happened in Germany after the 1st World War. The German government went haywire printing money, prices in Germany skyrocketed and and people literally had to take wheelbarrows full of money to the store by basic food items (if they could get them at all). We all know what this dire economic situation led to, World War II.

Answer 5

If the World just printed more money, the value of the currency would decrease. For example, after World War 2 in Germany, they printed more money. The result ended up, the value of the currency was decreased. So, if you could originally get 10 marx (old German currency I believe) for every $1, when they printed more money, you could get 100,000,000 marx for every $1. (I don't think these are the actual numbers, just used to show how the currency would be affected).

Answer 6

Becasue there is suppose to be enough money in gold in Fort Know to back up the money that is actually out there. BUT that is the govenrments thoughts. MINE are I don't think there is anywhere near that much money in fort know. EVERYTHING keeps going up inflation and all. SO where is the extra gold coming from? I myself think it is all a crock of chit. And agree make more money. But then the governemnt would be able to keep people poor and themselves rich.

Answer 7

Because doing that just screws up the economy with crazy inflation.......... just look at early post-communist Russia, or modern day Zimbabwe where they've tried that approach, and what a major balls-up it made of their economy....... I believe the same applied to Britain back in the days when Harold Wilson's labour government was in charge (c. 1960's / 1970's)

Answer 8

something about making it worthless, if there is too much money going around. the more money going around, the more things cost too. you know what? ask Allen Greenspan.

Answer 9

because inflation would go up and then the prices of everything would go up to

Answer 10

this will cause inflation, dumb dumb....