Why don't the poor countries print lot of their currency notes get richer?
Printing money increases the money supply. Like any commodity, increasing supply decreases value. When say the U.S prints one dollar, it has no value. Yet it can purchase the same goods and services as any other dollar. It gets that sudden value by transferring a portion of the value of existing dollars, to the newly printed dollar. Every new dollar printed, makes all other dollars worth less in value, and will not buy as much. Called inflation. This is because although more money is floating around, there is still a fixed amount of goods for sale. This will eventually lead to higher prices or inflation. The U.S. (and other governments) issue and sell treasury securities, as an alternative to printing massive liquidity. This is how governments borrow money. Investors, foreign governments, many retirement funds, invest in treasuries where they loan the U.S. government money (in U.S. dollars) and the U.S. Treasury agrees to pay it back. However, investors willingness to lend money by buying securities from a government, is based on faith and trust. A governments stability, ability to defend itself, assets, and GNP are major factors The "regulations" set when poor countries considered high risk, with low bond ratings, cannot get investors to buy their securities. So they cannot borrow the same way other do. If they print more currency, it becomes inflationary, usually leading to hyperinflation. The fear of them doing just that, is the reason investors will not buy their security notes. So in addition to creating hyperinflation, printing more also kills off any prospects of investors investing in your government in the future.
Why can't governments become rich by simply printing money?
Because the value of money is not constant. If there is too much money, people with lots of money will pay higher prices, which sellers will gladly accept. The value of money falls, which is called inflation. If there is not enough money, people cannot pay the prices asked for ints, so sellers have to drop their prices, making the money more valuable, which is called deflation.If the government prints a lot of money and causes inflation, ot reduces the value of all the savings everybody has. The government gets more goods, but at the cost of savings. It effectively becomes a tax on savings. This is bad, because people realise this and rush out to spend their money before it loses its value, not saving for the future.If there is too much money, people stop spending money because the money is actually increasing in value in their pockets. So all the people who would supply the goods and services they would spend that money on lose business and the economy contracts.Not inflation and deflation harm the country, but deflation more. Governments playing with the money supply get some short term benefits, but much worse medium and long term problems. Sensible governments now accept that stable money is a huge social benefit, both for society and for them. For a number of reasons, they prefer to err on the inflation side, and target having a small amount of inflation (2% for many developed countries). And some give control of the money printing to a non-political central bank.
Why can't countries print more money to pay off debts?
I might sound really stupid but I have always been really bad at economics and current events...especially ones about the recent financial crises. If some countries go bankrupt, why can't they print more money to pay off other nations? I mean, i get what inflation is, but why can't you just print a lot of money and give it to other nations without letting it circulate? And if other countries accept money from debtor nations, wouldn't they suffer from mild inflation as well since they just added money to their economy? I actually don't really know what it means for a country to be bankrupt. For example, is Greece's economy viewed to be failing because they have too much debt? but i heard that US has the highest debts and etc...And what does it mean for Greece to default?? Why is that something that the world and especially Europe fears? And am I thinking to simplistically, assuming that debtor nations repay their debts with cash? Because I think it would be hard to pay billions in cash, but if not cash, how do nations carry out such transactions? Sorry for so many questions, but I would really appreciate it if someone can help me out here!!! :DD
What is causing our paper money to be worthless?
It is not the paper money that is worthless, the USD is only a reflection of the value created by the US Americans. This the economy and its value is falling, so is the value of the USD. It would not matter what represents the value. You can store value in several forms, but only money is practical: * real estate - actual deeds in protectible land * gold - once the basis of the gold standard * silver - once the basis of the silver standard * precious stones, and precious metals * collectibles, e.g. original art by a famous artist or antiques * livestock (see African currency) Because the Asian economies and Europe are doing economically better, had less of a financial banking crisis, their currencies like the Euro are doing better. It is a direct consequence of the lifestyle the Americans have lived in the past. They borrowed money from overseas, did never save any money, invested it in the property market and consumed more than they earned. Now it is collapsing, so the economy shrinks and the value of the USD falls. Hope this helped understanding the demise of the average American citizen. It is partially their own fault!