Why can't we just print more money in order to solve poverty and give this to the poor?
Yes, I know that the answer to poverty is not as simplistic as printing money and giving it to poor people. But what I don't understand is WHY this can't work and WHY money becomes devalued should this happen. If anyone can explain this to me without to much economics mumbo jumbo I would be very grateful!
- Doctor WhyLv 71 decade agoBest Answer
Suppose you have a cake. You hand out tickets to people so they can each get a piece. If you hand out a thousand tickets, either you're going to have to slice the pieces very, very thin, or a lot of people are just going to have worthless tickets. If you hand out just two, each person can have quite a bit of cake. The value of the tickets, then, depends a lot on how many you hand out.
That's basically what money is. It's a promise to pay from the government. You get the money and you can trade it with people in that country for stuff. And just like with the cake, if suddenly tons of people have money, either the money ends up being worth very little or most of the people with money get nothing for it.
A good example of this from history was Germany in 1922. Faced with a sagging economy and forced to pay massive debts as reparations for World War I, the government started printing money as fast as they could to meet these demands. Paper mills and printing presses were LITERALLY running as fast as they could night and day. Over a period of six months or so, the value of the German mark dropped 3.7 MILLION times! What you could once buy for a mark now cost four million marks. People literally lugged around suitcases full of money to pay bills. Absolutely crazy stuff.
Link below for hyperinflation reference. Hope that helps!Source(s): http://www.usagold.com/germannightmare.html
- 1 decade ago
I think that you're plan would work but only if (and that's apparently a big if) you could keep that money away from special interests more organized and more popular than the poor. I also think that the plan would only work for at most 10-30 yrs. Then either a business cycle will occur causing a recession or depression, or wealth will become redistributed so that the former poor will become the new rich and former rich will become the new poor meaning poverty will still exist only it would rest on different people, or both will happen and it would all be because money was printed. I feel that a better plan would be to give everyone a big fat tax break (maybe about 100%) and eliminate minimum wages along with licensing. That would probably do it.
- sophiebLv 75 years ago
you think like Obama in that he prints a lot of money too, and gives it to the poor and that messes up everything and puts America in debt big time.
The more that's printed the less valuable it becomes and the less it will buy because there's lots of money in circulation. When there's less money in circulation it's worth more. The poor need to work, and that's the bottom line. There are more jobs out there now than there were a few years ago, but what's happened is that we sent all our mills overseas (now they have bad air and ours is better, however their bad air is coming to America already).
We're in over 18 trillion dollars that we owe countries already, a lot to china, and so each individual person here owes a lot. So we either pay up or do with less. Personally i believe technology has hurt us, however it's helped out a lot of other countries and pulled "them" out of poverty by us hiring them.
There will always be poor, however bringing in a lot of immigrants will only make America poorer.
- Anonymous1 decade ago
Consider it as a supply and demand equation. If you lived in a village of 100 people, goods would be priced at the level of the money/desire (demand) of the supply available. If someone suddenly introduced an anonymous supply of money into this fictional village, overnight everyone would have more money, but they would not have more buying power. Why? Because the supply of goods remained the same. So if the money supply were doubled, they would all compete for the same goods as before, but would end up in short order paying twice as much for the same goods. This would devalue the currency by 50%, or, said another way, the money "today" would only buy 50% or half of what it bought last week. This is why old dollars are destroyed when we print new ones. This is also why increasing the money supply or decreasing the money supply always has consequences in a national or global economy. This is also why countries guard their exchange rates and currency volume very carefully.
Of interest to you may be that fact that in the second world war, the Nazis tried to disrupt the U.S. economy by dropping off English-speaking Germans on U.S. shores, with large supplies of counterfeit money with them. There were some items in the news when several of these invaders were found out and arrested.
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- Anonymous1 decade ago
The monetary system in a country depends on it's gold reserves, it's a bit like someone owning a house and borrowing money, they would say..'my house is worth £250.000 and I don't owe anything on it so can I borrow some cash, your money's safe because if I don't pay you back you can take my house and sell it for the amount I owe you', well a country's gold reserves are like that house, they're a safeguard of the country's wealth, other country's will trust and deal/trade with us so long as we've got gold to secure any deal, thanks to Gordy at N0 10 we're not in such a good position to trade any more as he's sold off a lot of our gold, I say sold, he practically gave it away, he let it go at well below the price it was worth, why did our glorious Gordy do that, why did he panic? perhaps he doesn't want Britain to be wealthy, perhaps the E.U. told him we've got too much money and to get rid of some and perhaps we'll never know. the bottom line is, you can't have more money floating about than the gold you have in reserve, that's inflation. If Britain was a super wealthy country with a massive gold reserve the politicians would need a good excuse not to share it out and use it for the good of our people it's the way of the world there's the needy and the greedy. I know it's not simple but I hope it helps a bit.
Ray. West York's. U.K.
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- 1 decade ago
First, a minor correction. People talk about the *government* trying to print enough money to get itself out of the national debt. THAT is the plan that could not work.
However, the government could indeed print a bunch of money for just the poor.and it would work to some extent. This would work very nicely for people who are only "poor" because of the size of their loan repayments, since repaying loans would prevent inflation. However, the problem is with people who are too poor to support themselves. They would eventually run out of money ... so the question becomes "how often do we print up money for the poor?"
Inflation is caused by having way more money dumped into the economy, than we can match with the amount of products we have created. Economists describe it as "too much money 'chasing' too few goods."
So, if we end up having to repeatedly print tons of money for the poor, then inflation could rise. But, if we keep the amount of money line with the growth of the economy, then THERE WOULD BE NO INFLATION. (Emphasis, since other people that have answered have cried "inflation" as if it would be automatic.) In fact, it would stimulate the economy since the money would certainly be spent (instead of saved), and fewer loans would go into default.
That's just the theory behind it. The primary problem is political. Who wants to see someone *else* getting money for free?
Beyond that, the 12-person committee (the FOMC) that is in charge of the US money supply has been very resistant to government issuance of money that takes them "out of the loop." Very resistant.
- KeyoLv 44 years ago
The simplest way to put it is that if there is more cash it will have less value just like anything else where the supply is great. If the Federa Government floods the market with cash, then prices will actually increase even more. There are several countries where this extreme is current today. In Argentina, they had 1000% (thousand!) inflation. Which means that the same item just keeps climbing in price. Many countries have adjusted their economies in order to prevent this type of problem.
- 4 years ago
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- 5 years ago
when more money is printed then, money will loss its value in reference to international currency or gold so money will be nothing more than just a piece of paper which will increase poverty in place of decreasing. Like we could see the history of second world war how the money lost its power.