So Why Doesn't The Government
<div class="IPBDescription">just print more money?</div> and solve it's debt problems.
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Comments
<span style='font-size:0pt;line-height:100%'>Oh wait....that's not true.</span>
So our money can be the equivalent of 1 peso to 1 dollar when in actuallity its 10 pesos to 1 dollar now.
(Pesos is the mexican dollar)
EDIT: Crappy Example, $1 Billion of gold = $1 Billion Dollar Bills.
So how do they work?
So how do they work? <!--QuoteEnd--></td></tr></table><div class='postcolor'><!--QuoteEEnd-->
Banks have what economists like to call "magic" powers. In this case these powers come from magical money sticks, which are the gnarled branshes of willow trees that have been blessed by Alan Greenspan. All the banks have to do is wave the stick around, and POOF! You get more money. Amazing, huh?
[edit] but in all seriousness, they just invest a lot.
So how do they work? <!--QuoteEnd--> </td></tr></table><div class='postcolor'> <!--QuoteEEnd-->
With loans and things, you pay back more than you got from them, thus they make ££... or something like that <!--emo&:p--><img src='http://www.natural-selection.org/forums/html//emoticons/tounge.gif' border='0' style='vertical-align:middle' alt='tounge.gif' /><!--endemo-->
A shop keeper has 100 units to sell and everyone comes in and buys 1 unit each (they all have enough money:)) The next time the shop keeper has some units to sell he will double the price and maybe only 70 people will buy the goods.
He still makes more profit and he can always decrease the price until he sells 100units or gets the maximum profit.
Problem is that his supplier will see whats happening and increase their prices.
Then we are back to the start <!--emo&:(--><img src='http://www.unknownworlds.com/forums/html//emoticons/sad-fix.gif' border='0' style='vertical-align:middle' alt='sad-fix.gif' /><!--endemo-->
.
Banks make money by charging you more interest on loans than they give you on your bank account (3% compaires to 20%~ on a loan) and a little also comes with playing the stock markets,
PS. Germany printed alot of money after WW1 and this lead the the situation of hyper-inflation (>20% i belive) that means that prices were going up by over 20% a year! The UK's inflation rate is now about 2.5%
So how do they work? <!--QuoteEnd--></td></tr></table><div class='postcolor'><!--QuoteEEnd-->
With loans and things, you pay back more than you got from them, thus they make ££... or something like that <!--emo&:p--><img src='http://www.natural-selection.org/forums/html//emoticons/tounge.gif' border='0' style='vertical-align:middle' alt='tounge.gif' /><!--endemo--> <!--QuoteEnd--> </td></tr></table><div class='postcolor'> <!--QuoteEEnd-->
Same with overdrafts. For my bank, if it's an authorised overdraft the interest rate is about 9%, if it's unauthorised the rate is about 30%. Ouch.
The prices of PCs would go down, because Dell would have to try and get rid of all their products and sell them to the consumer, but there's too much of them, and people can haggle for lower prices.
Imagine if the world had an unlimited supply of apples. Would you pay even 25 cents for an apple, even though you could just magically make one yourself? No, of course you wouldn't.
In an economy, it's the material assets (hard currency, though not actually currency) that determine a country's wealth. If you print more representative currency (paper bills), then the value of the paper bills go down, because you aren't making more resources/supplies to back it up.
Basically, a dollar will buy you 1 McChicken Sandwich from McDonald's. Suddenly, the US prints out double the amount of paper money out there, but there isn't any more McChicken sandwiches to buy. So it would then devalue from 1 USD == 1 McChicken Sandwich, to 1/2 USD ==1 McChicken Sandwich.
Banks make money because they invest in projects that return even more money. Money is "generated" when people make products. Say you found a bar of gold on the ground. That's worth something. Then you sell it to another person for "cash" and thus that gold is entered into our economy. The purpose of a bank is to invest in a project that will give out even more money, and then pay back a small dividend to the bank's stockholders.
Economics 101 for you.
Edit:
Rue, after WWI, not WWII, Germany was in massive debt. They were forced to pay reparations, their industry in the Ruhr was seized by France, and their government decided to print more paper money.
The value of the Mark went down from 1.4 Marks ==1 USD to 4 Trillion (that's right, Trillion) marks ==1 USD. It was to the point that the paper and ink on the currency it was printed on was actually worth more than the actual currency itself.
This is the case in many African nations.
honest
<!--QuoteEnd--> </td></tr></table><div class='postcolor'> <!--QuoteEEnd-->
wouldn't it be $1 = 1/2 Mc Chicken because they would raise the price to $2 because there is twice the amount of $$$.
Can anyone spot the mistake in that sentance?
I did say crappy example. Although in the UK I believe our Gold and Money Prints are Averagely the same amount.
Can anyone spot the mistake in that sentance? <!--QuoteEnd--> </td></tr></table><div class='postcolor'> <!--QuoteEEnd-->
Best Catch Evar.
But yeah, you got it.
It's stupid to have GOLD backing up your paper currency. That's basically mercantilist thought, which was debunked quite a long time ago.
With the current capitalist scheme, we have the entire economy backing up our currency. With a dollar, you can buy gold, sure, but you can also buy food, clothing, weapons, property, other stuff.
The value of your currency is based on what your economy can back with it.
So you don't want ONLY GOLD backing up your soft currency, you want your entire economy backing up your paper money.
A shop keeper has 100 units to sell and everyone comes in and buys 1 unit each (they all have enough money:)) The next time the shop keeper has some units to sell he will double the price and maybe only 70 people will buy the goods.
He still makes more profit and he can always decrease the price until he sells 100units or gets the maximum profit.
Problem is that his supplier will see whats happening and increase their prices.
Then we are back to the start <!--emo&:(--><img src='http://www.unknownworlds.com/forums/html//emoticons/sad-fix.gif' border='0' style='vertical-align:middle' alt='sad-fix.gif' /><!--endemo-->
.
Banks make money by charging you more interest on loans than they give you on your bank account (3% compaires to 20%~ on a loan) and a little also comes with playing the stock markets,
PS. Germany printed alot of money after WW1 and this lead the the situation of hyper-inflation (>20% i belive) that means that prices were going up by over 20% a year! The UK's inflation rate is now about 2.5% <!--QuoteEnd--> </td></tr></table><div class='postcolor'> <!--QuoteEEnd-->
20% inflation?I'm sure it was a <i>lot</i> higher
i believe the current annual inflation rate in Zimbabwe is 500%
(Pesos is the mexican dollar) <!--QuoteEnd--> </td></tr></table><div class='postcolor'> <!--QuoteEEnd-->
Aahahahahahahahahahaahhaahhhahahaa!!!!!
That made my day! <!--emo&:D--><img src='http://www.unknownworlds.com/forums/html//emoticons/biggrin-fix.gif' border='0' style='vertical-align:middle' alt='biggrin-fix.gif' /><!--endemo-->:DD:D:D:D:D:D:D:
Simply proves all I ever thought of Americans. Thank you.
Plus, do you think other nations would accept our mega-printed money to pay of the debt? They index it against inflation.
The stock market is the same way, people profit based (almost) solely on percieved value. The piece of paper you usually get when you buy stock is completely worthless. Somebody can have a bad monday, and you can lose millions of dollars. I'm not kidding.
before then you could always get your moneyback in gold coins from a federal reserve, because quite often banks would print their own dollar which would only work at their own location!
that is correct, just the publics faith in the money backs it
Go take an economics class n00b and then you be able to tell us why this is a totally stupid way of thinking.
~edit~
Actually many nations have thought the same thing, with disasterous inflation. So you aren't the only stupid human to think this. <!--emo&:D--><img src='http://www.unknownworlds.com/forums/html//emoticons/biggrin-fix.gif' border='0' style='vertical-align:middle' alt='biggrin-fix.gif' /><!--endemo-->
A shop keeper has 100 units to sell and everyone comes in and buys 1 unit each (they all have enough money:)) The next time the shop keeper has some units to sell he will double the price and maybe only 70 people will buy the goods.
He still makes more profit and he can always decrease the price until he sells 100units or gets the maximum profit.
Problem is that his supplier will see whats happening and increase their prices.
Then we are back to the start <!--emo&:(--><img src='http://www.unknownworlds.com/forums/html//emoticons/sad-fix.gif' border='0' style='vertical-align:middle' alt='sad-fix.gif' /><!--endemo-->
.
Banks make money by charging you more interest on loans than they give you on your bank account (3% compaires to 20%~ on a loan) and a little also comes with playing the stock markets,
PS. Germany printed alot of money after WW1 and this lead the the situation of hyper-inflation (>20% i belive) that means that prices were going up by over 20% a year! The UK's inflation rate is now about 2.5% <!--QuoteEnd--></td></tr></table><div class='postcolor'><!--QuoteEEnd-->
20% inflation?I'm sure it was a <i>lot</i> higher
i believe the current annual inflation rate in Zimbabwe is 500% <!--QuoteEnd--> </td></tr></table><div class='postcolor'> <!--QuoteEEnd-->
Probably more like 200%. I remember something similar to being told it was like 1,000 deutschmark as the equivilant to a dollar.
Pre WWI:
1.4 Marks to the USD.
Post WWI:
X Trillion (can't remember off the top of my head) to the USD.
It got over the point where the paper/ink that the money was printed on was worth more than the actual currency itself.
Pre WWI:
1.4 Marks to the USD.
Post WWI:
X Trillion (can't remember off the top of my head) to the USD.
It got over the point where the paper/ink that the money was printed on was worth more than the actual currency itself. <!--QuoteEnd--> </td></tr></table><div class='postcolor'> <!--QuoteEEnd-->
Yeah, there was "hyperinflation" after WWI. This was due partly to the fact that we put HUGE payment plans on the Germans, so they just printed a bunch of money to cover the debt.
At one point it was up around 1trillion marks per loaf of bread.
Pre WWI:
1.4 Marks to the USD.
Post WWI:
X Trillion (can't remember off the top of my head) to the USD.
It got over the point where the paper/ink that the money was printed on was worth more than the actual currency itself. <!--QuoteEnd--></td></tr></table><div class='postcolor'><!--QuoteEEnd-->
Yeah, there was "hyperinflation" after WWI. This was due partly to the fact that we put HUGE payment plans on the Germans, so they just printed a bunch of money to cover the debt.
At one point it was up around 1trillion marks per loaf of bread. <!--QuoteEnd--> </td></tr></table><div class='postcolor'> <!--QuoteEEnd-->
Wow that much!? I thought it was like 100,000 at most for a loaf of bread :O