International Debt?

Question

Why can't the government or Bank of X just print more currency (money) in order to pay for its international debt? Wouldn't that be much easier? I am sure there is more to it thatn just printing more money like inflation, but need more detail. This could be quite a debgate.

Answer 1

First you should get familiar with the fact that the government does not print our money. The Federal Reserve  (Fed) prints our money and they are a privately owned bank. Further the Fed's depositors are foreign entities, not US owned. In other words the gold in the vaults of the 12 Federal Reserve branches is over 97% foreign owned.

That is scary enough.

As was said, printing money causes inflation.

What that really means is that the country has a certain value. That value is no longer based on the silver and gold standard but on  what the country produces each year (as in hard core commodities). The gross national product, if you will.

Nowadays, with special interest groups curtailing manufacturing, and legislators being paid off to pass their agendas, with Unions seeking benefits that make profits for creating commodities  in other nations higher, the situation has become such that we actually spend fuel to export scrap metal only to have it remanufactured and spend fuel to bring it back half way around the world  while sending our soon to be valueless currency to pay for it to forgien countries.

The bottom line is that soon our dollar will be totally worthless period.

No country will want it.

We are not producing enough , we are spending without balancing our spending through gross national product. Instead we are worrying about the eviornment and pensions to the point that China is about to drill for oil 30 miles off the coast of Florida while we are not and we can't even stop them.

We have become so eco freindly and spoiled to the point of socialism with give aways that we are going to be totally broke. Our dollars laughed at, print all you want.

The toilet paper on the roll will be worth more because it is cleaner and at least one can wipe his butt with it.

Answer 2

I think WCWC has explained it pretty well. This is not much of a debate at all, you see, why would anyone want to lend money to someone if it it will be paid back in some far less valuable commodity?

In other words, no one will LEND you the money if they know you will simply pay them back in some c**p currency, so the US has become such a huge debtor in part because it does not increase the money supply excessively (perhaps arguable).

Answer 3

Yes, inflation would be the largest fear. When ever we increase the money supply every dollar in circulation becomes less valuable raising the price of every good in the economy.

Answer 4

In a nutshell, printing more money means there's more currency chasing the same amount of goods. Those goods have a fixed value, whatever value consumers place on them. More currency chasing the same fixed value means less value per unit of currency, aka, inflation.

This causes big problems for the citizens of the country, but on a more fundamental level, if you owe me money and you just print more money to pay me, why should I except that money? I know it's worth less than the real debt you owe me, so why should I accept it?

This is why loans from the International Monetary Fund to poor countries are NOT in the currencies of those countries.

Answer 5

Countries do it all the time. It's essentially the same as reneging on part of the debt, as they are repaying with currency that has less value than what they borrowed. That's why you generally make foreign loans denominated in dollars, euros or some other stable currency.