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Discussion in 'Off topic' started by ?.i.?, May 17, 2008.
if people are short of money why cant the government MAKE some
The more money printed the less it is worth. The less money is worth, the higher prices for goods has to be raised. It becomes a vicious cycle that shutsdown production of everything. You and I wouldn't work for a living if the money we made had no value.
Printing money excessively drives up inflation.
Remember that price is a representation of what a consumer is willing and able to pay.
So, assume that I have a loaf of bread, and you have one dollar. You need to eat, so you'd be willing and able to pay one dollar for that loaf of bread.
Now, assume the government printed ten dollars instead of one and gave it to you. The price of bread would now be ten dollars, because you would be willing and able to pay ten dollars for bread.
If I didn't increase the price of my bread to ten dollars, supply wouldn't be able to keep up with demand.
So, it's not just important that you have money. The real value of that money has to be improved also.