On what basis any country print currency ?

Question

Most of the countries print thier currency in their own country so what prevented them to print the currency according to their need? As in the case of developing countries they take loan from other developed countries or organizations to fulfil their need? why don't these countries print currency and pay their debts?
I have heard that there are certain limits to print the currency for e.g. it depends on the levle of foreign exchange or the amount of gold in the country????

Answer 1

The price of money is the interest rate. The value of money is 1/Price Level. The Change in the Price Level = Change in the Money. As you print money, it becomes less scarce. As it becomes less scarce, it buys fewer goods per unit and so devalues. At some point, it would be nearly worthless. You can print all you want, but it doesn't change the value of the whole amount of money. So a nation worth $1,000,000 US that created 1,000,000 shillings would be at parity for the dollar. If that nation doubled its shillings, it is still only worth $1,000,000 but each shilling will now buy only half as much in goods and services.

Some countries that do not have developed tax systems do print their money. Life is pretty bad there, you do not want to be there. Runaway inflation is nasty. I believe it was Zimbabwe that announed it has a 74,000% inflation rate. The police were instructed to beat any shopkeeper who raises prices. There are no goods in the shops now for them to be beaten. People will ultimately starve.

Currency is a form of debt owed by the government to the households. They return it as tax.

As you can see, money of any nation, including the United States can quickly become worthless.

Any nation that is a risk for destroying its own currency has to borrow in the lender's currency. So if that country above borrowed $500,000, it could pay initially at 500,000 shillings but after it doubled its money it would owe 1,000,000 shillings.

Answer 2

??? you need an uncomplicated answer to macro economics? not gonna happen. forex solves many issues. one does not fulfill poverty. One tries to do away with it. the gov never intentionally prints extra something