Forgive my ignorance, but why dont the poor countries just print more money and become rich?

Answer 1

A good question.
Inflation is when a certain form of currency starts to have less value over time. It is caused mainly by two things: people's perception of value, and the economic principle of supply and demand.

Throughout history, governments have tried to solve financial problems by simply printing more money. This can drive the value of money drastically downward, especially in modern markets where money is not backed by gold. Twice as many dollars in an economy makes those dollars worth half as much.

After World War I, Germany was forced to pay war reparations of about $33 billion. It was virtually impossibly for the nation to produce that much actual output, so the government's only choice was to print more and more money, none of which was backed by gold. This resulted in some of the worst inflation ever recorded. By late 1923, it took 42 billion German marks to buy one U.S. cent! It took 726 billion marks to buy something that had cost just one mark in 1919.

Example of Inflation:

Let's say you live on an island where everyone loves candy. However, there's a limited supply of candy on the island, so when people trade candy for other items, the price is fairly stable. Over time, you save up 50 pounds of candy, which you can trade for a new car. Then, one day, a ship hits some rocks near the island, and its cargo of candy washes ashore. Suddenly, 30 tons of candy are lying on the beach, and anyone who wants candy can just walk to the beach and get some. Because the candy supply is far greater than the demand, your 50 pounds of candy is all but worthless.

Answer 2

Far be it from me to beat a dead horse, but I just wanted to add one thought to the discussion.

There are very few countries that use Gold or any other precious, semi-precious metal as a backing for their money.

The value of money is based 100% on the law of supply and demand.
Too much money chasing too few goods makes prices rise. This is inflation
Too little money chasing a lot of goods makes prices fall. This is called deflation.

If I have 2 dollar bills and two toasters, the price is easy. If I suddenly print 2 more dollars, I have 4 dollars and two toasters. Making the price of each toaster $2 instead of 1. Or, in other words, 100% inflation.

Printing more money is a cosmically bad idea!!

Hope this helps,
Good luck!

Answer 3

think of it this way, if everyone in the country was rich the demand for huge houses would go up....but a country only has so many huge houses. Say you owned the biggest mansion in the country and when you bought it it was worth 1,000,000. Then the Gov't printed up money and made the country "rich". Now when you go to sell your house everyone could afford to pay a million for it. But some want your house more then others and would be willing to pay more for the house. Everyone has all this money now 1,000,000 is nothing. now your house is worth 10,000,000. And the one room hut near the town dump is also worth 10 times as much.
People with more money are willing to spend more money to get the things they need and want. Hence the source of inflation

Answer 4

Because printing money with no backing creates inflation, the reduction in the value of the purchasing power of money. For instance, in the us (IN THEORY) we have all these buildings, businesses, etc etc to use as collateral for our money.... But you do have a point in some ways.

This has been attempted in many countries including Brazil and Bulgaria with disastrous consequences. Prices rose 1000% or more

Answer 5

to print money they need gold in the reserve bank and without the gold to back it up it is useless not to mention the legalities and trading with other countries maybe the governments should stop spending so much money on war and be more concerned about there people instead

Answer 6

Money has to be backed by something. Otherwise - it is just useless paper-! Printing money with no backing behind it increases the supply of the "money" available, and thus the term "inflation" comes up-!

Answer 7

They don't have what they need, and they wouldn't be able to trade with other countries because what good would their created cash be to anyone outside their country?

Answer 8

Your ignorance shall never be forgiven, for you are beyond forgiveness. Have you ever heard of inflation? Perhaps you should research you ideas before sharing them with everyone else, to save the embarrassment. Just imagine all of the not so ignorant people laughing at your question right now. Thank you and good night.

Answer 9

see the website under money and economy

Answer 10

if they print more money, then MAJOR INFLATION occurs, and they get poorer.