Comments on: The Problem with Printing Money

By: DR NABEEL ASHIQ

DR NABEEL ASHIQ — Sun, 11 Oct 2009 22:09:30 +0000

HI SO THE END POINT IS THAT PAPER MONEY IS NOTHING AT ALL . IF U INCREASE PRINTING IT WILL LOWER UR MONEY VALUE IN COUNTRY N CAUSE INFLATION . AND SAME THING IF U WANT TO EXPORT ANT ITEM TO OUTSIDE ITS PRICE WILL NOT B ABLE TO TOLERATE BY BUYERS AS THE PRICE IS ALREADY HIGH IN UR COUNTRY .THIS WILL CREATE A BUSINESS SO DIFFICULT TO DO N ALL WILL HAPPEN WILL B DIASTER .

By: Pakistani blogger

Pakistani blogger — Thu, 03 Sep 2009 18:53:34 +0000

@AG: The money would be useless to an importer until it is converted into his home country’s currency. When he does that the money would eventually find its way back into the country of origin and lead to inflation there.

Remember the little bits of paper we call money is actually worth nothing. Its the value given to it by a country’s central bank that is worth something. Outside your country the money is only worth something when it is exchanged into the local currency. That exchange is only possible if the originating country’s central bank allows it and accepts its own currency back.

However there are a few countries in the world that can get away with printing money to pay off foreign debts to some extent. Countries like the US, European nations and Japan have currencies that are used by central banks around the world to keep their foreign exchange reserves. So their currency is more acceptable globally. However even here there is the risk that if you continue to print money central banks will loose confidence in your currency and start using other currencies (such as what china is starting to do with its dollar reserves).

By: Adwit

Adwit — Sat, 29 Aug 2009 22:15:37 +0000

nw i more thing to all this if there is a construction required to be done for which the GOVT is payin an international company . why can’t the govt print extra money get these jobs done or defense deals etc.

By: karam

karam — Wed, 24 Jun 2009 10:39:28 +0000

if it were that easy to solve an economic problem we wouldnt be in this situation in the first place

By: Bond

Bond — Wed, 01 Apr 2009 23:18:04 +0000

Hi All,

I went through this blog, i have a question on printing Money, Lets CountryA came up with ProductA with costA, CountryB is intrested the Product and buys the product for CostB, lets assume the gain CountryA got is GainA, now the question is how the CountryA represents this gainA????

By: Ryan

Ryan — Tue, 31 Mar 2009 07:06:15 +0000

Printing money would affect the exchange rate, so it would be adjusted for that way and would not help you pay off national foreign debt

By: Paul Hield

Paul Hield — Tue, 24 Mar 2009 06:37:10 +0000

The biggest problem with government printing money is that banks regard it as their prerogative and is the source of all their income. Since, under a fractional reserve banking system, banks lend out between 10x and 30x what depositors invest, banks have created between 90% and 97% of all the money in use and they charge interest on all that money. If government stepped in to create money instead, the banks in their current lucrative form would cease to exist.

By: kanika

kanika — Sun, 22 Mar 2009 13:40:00 +0000

hey the quetsion which AG asked is very good i was thinking about solution so just trying to find the answer through applying accountacy i dont know may be i am wrong……..when u print money and pay off your debt with it to other country the debt on the laibility side of the balance sheet is wipped off but your assets standing as it is so your balance sheet will not tally….where will you put the diffrence….? well i think this may be a wrong solution but if any of you have the anwer then please reply

By: Richard Rainey

Richard Rainey — Sun, 22 Mar 2009 01:25:15 +0000

Printing money by a government, might not lead to inflation, if that government handles that printed money wisely. Take the US and other Western economies that are in trouble today because of the credit failure by banks and financial institutions.
If I were one of those governments looking to get out from under these financial problems by “printing” my way out I would do it this way to solve the problem and prevent any form of inflation that might result from that “printing”.
First, the money that I “print” I would give directly to the “people” in the form of a 33 year interest-free loans limited to $400,000 dollars per. Instead of giving it to any industry or business. This way would get the money into the economy quicker, more efficiently and have a better affect on the economy than going through the regular business cycle and hope they lend it out.
This method lets the borrower pay-off all his interest-burdened monthly debt: mortgage, credit cards, student and auto loans etc. Lowering the borrowers monthly costs substantially allowing him to either save or spend that positive differential created by ridding himself of the interest on his debt and the extention of his principal out over 33 years. While at the same time re-capitalizing those finacial institutions that held that debt. This would keep government out of business’s business and solve two problems using the same dollar a two-for-oner.
To prevent any inflation from this printing the government, as those loans are repaid, would take that money out of the economy. And the banks, having received a large influx of capital, would only lend out what they would have been repaid over the year had nobody defaulted on their debt.
Though trillions were printed only a 1/33 of the money would be affecting the economy at any given time. So, at most, inflation would be around 3%. Had the money been borrowered we be paying about 6% compounding for years.

By: Seven Communications Blog » Printing Money and Deflation

Seven Communications Blog » Printing Money and Deflation — Sat, 14 Mar 2009 06:31:30 +0000

[...] Many have linked to a post where I explain how printing money can lead to hyperinflation. [...]