why are there so many poor countries when money is simply ink printed on paper?

Answer 1

If only the world saw it that way. Per year: $700 billion on military, $50 billion on cigarettes, $33 billion on cosmetics. Just one percent of the money spent on military each year alone could wipe out world poverty. But it's not just 'poor' countries... 650 million Asians, 165 million Europeans, 37 million Americans, 3 million Australians all live in poverty, and the list could go on.

As for just being ink printed on money, take a look back after Germany had to sign the treaty of Versailles. Their economy went so bad that they tried fixing it by printing more and more money. This made their economy even worse, in just five years they printed 17 billion times more notes than usual, causing their what had been exchange rate of 8.9 per US$1 to rise to millions per US$1. Then after a few months they were forced to start up a whole new currency.

Answer 2

Countries cannot just print paper money, whenever they feel like it ! The monetary system is based on gold, so for every £100.00. of paper money a country prints, it must have gold in its` bank vaults. to that value. If it prints money without having the equivalent amount of gold, the nation will go bankrupt. If a country buys produce from another country, it must pay for the produce with gold, not bits of printed paper.
Prior to the second world war, this was the predicament that Germany was in, when they needed more money, they just printed it. This resulted in the paper money becoming worthless, if a person wanted to purchase a loaf of bread, they had to pay millions of marks for it.The stories go, that people would take their money in large suitcases just to buy basic foods, because they needed so much of it. The lucky ones who had gold jewellery would use this instead of money. To have gold in its` vaults, a country needs to have goods to trade with, if they do not have trade able goods they can`t build an economy, so that is why poor countries are poor.

Answer 3

Oh dear, Tracey P. That's the type of remark that people on DSS say! They think that the money is simply printed so that they can have it. We have to get real here.

In the real world, people have to go to work and pay tax, so that the tax can be used to pay DSS, education, armed forces, police, etc., etc. Paper money is not 'backed' by anything and certainly not by gold.

Paper money is based on trust. I take a £20 from you for a service or product because I BELIEVE that I can pass this to someone else. That person also believes this. So do all the people in the UK and in the rest of the world. That's why we can give paper and receive stuff.

If, however, you simply printed trillions of pounds just because you fancied doing it, people would lose the trust and belief instantly, and you would be left with a pile of paper that no-one would accept.

The serial numbers on the notes allow other countries to monitor how much money we print and also allows us to monitor their cash flow. In Germany in 1923, the people lost confidence in the currency and people were paying for stuff with wheelbarrows full of paper money. Then the government printed notes with numbers like 5,000 Trillion Marks! In the end, the economy collapsed.

The only way that the Third World can get some of our cash is to either be given it (from your tax and mine) which means that we have to do without something, or they sell us something and we pay them the PROPER price instead of ****-all as we do now!

We have jeans for £3 in Tesco because people work for 2p an hour in the Phillipines. So we all have to make up our minds - do we pay more or not?

Answer 4

Because it's not simply ink printed on paper. Money is more in your mind than it is something physical. If the government put more money in our country, the prices of things would just go up.

Answer 5

In order for money to have any meaning, the countries central bank and/or government must have something of value to represent that money to effect trade rates. For example, if a country was totally insular and cut off from the rest of the world, a country that simply prints money with no real backing but maintains a central banking system could theoretically mass produce money that actually had value, since as long as all people in that country would represent that money to whatever value assigned to it, it would be it. However, exchange rates affect the value of money. The worth of the pound or US dollar is calculated by the amount of money put into circulation and the total amount of value, commodities, gold in the largest countries though the US has gone back and forth with silver standards or even no standards at all during the civil war. The reason that the value of each dollar is important is the exchange rate, otherwise any value given would be fine. But when the US buys something from Mexico with US dollars, all the American dollars are backed by gold deposits that give effect to the money and thus make each dollar inherently worth a certain amount of money. The Mexican Peso is also backed with gold or silver but due to the fact that Mexico prints more money, each individual peso is worth less than a dollar since the amount of gold behind the peso is not as valuable. Or for a simple analogy, the individual American dollar is backed by gold that would sell on the open market for the approximate value of one dollar, but the individual Mexican peso is backed up with only enough gold on the market to be worth 1/2 of a dollar. (this is not the real value) As a result, when a merchant sells something in Mexico, they need to charge 2 pesos, to equal one dollar and get back there one dollar's worth of investment in America. If Mexico made 50% more pesos as a way to increase money, but retained the same amount of gold, there pesos would decrease in value and now would require 3 pesos to equal one dollars worth of gold. So with the increase of printed money, the country has only devalued their currency and in effect made anyone who had 2 pesos poorer. Since no country 'is an island' the value run off by the country has an averse effect if more printed money is on the street without having financial backing in the bank.

Answer 6

Paper money is worthless if you don't have an economy that is viable and gold/silver to back it.

example: Say i owned an Island I lived on it with say 10 people, we printed up billion of dollars in paper money. We didn't have an economy, and nothing like gold/silver to back the currency, thus the currency is worthless.

Answer 7

if you simply print more money like you suggest, you have more money chasing the same fewer goods in the economy, thus fuelling hyperinflation. every one has a lot of money to spend and would pay anything to get say just a loaf of bread cos they can afford to. check the case of Zimbabwe now where inflation is around 1800%. that is, if you bought something exactly a year ago its price now would be about 1800% more! (not 180% or !8%). cos there is lots of money and very few goods and people would like to pay more just to get the same thing.

Answer 8

because of the fact money isn't purely ink printed on paper, the published paper money is actual a illustration of the quantity of gold the rustic has. for this reason, if additional funds began to be printed than there is gold (i.e. the 'genuine' money), the paper may be properly worth much less and much less, inflicting inflation.

Answer 9

They way I understand it is this, money as in paper money is a token. It needs to be backed by a commodity or another currency to give it value.

For example, I own a hundred tonnes of gold. Instead of using the gold to buy and sell goods, I decide to print Shetland Waffles as a new currency backed by my gold, about a hundred of them, each waffle has a value of one tonne of gold. Now i can use the waffle as a token of payment. You know that in exchange for each waffle you are guaranteed one tonne of gold, the waffles are therefore valuable. If I decide then to increase the number of waffles in circualtion to say one million the value of the waffles in circulation drop, as each one is worth less gold, (about 0.1kg of gold).

Most countries don't back against gold, but a basket of currencies (US dollar, Euro, Yen, Sterling). They can increase the amount of paper money in circulation, but if they do not increase the amount of foreign currency they hold, they value of the money decreases. Thus you can not really just print your way out of debt. A country needs to trade with the rest of the world to bring in foreign currency and shore up its reserves.

I hope this answer helps.

Answer 10

ink printed on paper is not money, when germany tried what your suggesting after ww1 it lead to hyper inflation causeing germany to nearly go bankrupt. money is a resource that can be generated by other resources for example if you own some land you can rent it out or sell it for money