Why can’t we print more money?

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Question: 

at this point, it feels like money was brought up as a solution to combat human’s inherent nature to be greedy and selfish. Just like that post, this is certainly more philosophical… but, I don’t see how a society where everyone does what they enjoy for work (or maybe they don’t but regardless a job is a job) and can get whatever they want (ideally within reason, luxury is nice but not always a necessity… even people who make above six figures can’t always afford luxury; the world is already like this).

The incentive to work should really not be a higher wage, working ANYWHERE should immediately give you the right to live comfortably.

Now, the main answer to the original question I realize; is inflation. Demand rises and then so do costs whether it’s for more product or more labor, whatever the reason… if from the beginning we gave every single worker regardless of the role access to food, water, shelter, clothing, and whatever else is needed for a human to be happy and healthy, I don’t see how the economy could suffer. Maybe my point is: the reason poverty exists is because of this economy.

I realize I’ve got off track, but if the government printed $50k and gave it to EVERYONE; sure people would absolutely use it irresponsibly but if that money is going back into the economy anyway… why does inflation even matter? Bc the American dollar in a way loses value? So what… just print more money… it’s paper, $1 = $1 but what’s the deal with $1 being $10 if there’s like a lesser need for people to make large profit because we can just print more money…

Answer: 

Printing more money does not solve a country’s financial problems, rather it would exacerbate those. Suppose an economy prints more money, it would mean that the consumers can now buy more goods or a greater quantity of the same good. The willingness to buy more goods or greater quantity of same good leads to rise in demand. In order to meet this augmented demand, however, supply should also increase. A magnified supply requires additional inputs/raw materials including labor. This in turn would drive up the price of the good/goods, thus causing inflation. Therefore, extra money in the hands of consumer does not help – the advantage that the consumers initially have with extra money is just wiped off by the market forces at work. The consumers would just be exchanging more money to get same goods. Thus, prices are determined by supply and demand independently through natural mechanism. Altruistic motive of the consumer or producer does not play any role in this case. Further, a country can never be rich by just printing more money. Suppose a country prints more money and passes a law to keep basic necessities viz., food and clothing at a minimum / low price to ensure affordability then the country would ultimately land in a situation where stores / shops would just run out of these items of necessity. The strategy of printing more money has been attempted by a few countries and has just led to hyperinflation without actually helping these economies to grow or become richer viz., Germany (1923), Zimbabwe (2008 – present), Venezuela (2016 – present).

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Last updated on July 19, 2022