So why dont governments print money and give it the poor people to eradicate poverty?whats the...?

Question

criteria for a government to make money? How do they decide how much money to print? Wouldn't it be nice if they print a lot of money and share it between needy and poor people?? please explain

Answer 1

You'd make all money useless by doing that.  Currency is tied to gold prices, world markets, GNP, etc.  There is actual value to the bill.  Printing money willy nilly eliminate leads to inflation which means increased cost for resources meaning you're right back where you started.

On top of that, introducing more currency doesn't change the available resources.  People need resources to live and live well.  Money is exchanged for resources.  The amount of money you have in your country doesn't in any way change the resources available.  If you have 5 sandwiches and 10 people, and those 10 people go from having $10 to $20, you still have 5 people without sandwiches.  And now the vendor can increase the price for a sandwich from $5 to $10 - same amount of resources, increased demand as more people can afford the sandwich, leads to inflating the cost of the sandwich.

There are countries around the world that did as you suggest.  They are deeply in debt to the countries that have attempted to bail them out.

Answer 2

A precise answer to this would take volumes (and not be very comprehensible in laymen's terms).

The basic premise of the answer is:

Any government that issues currency in such a manner will trigger hyper-inflation, which makes the money they hand-out basically worthless.

This was basically what happened in Germany after World War I.

As for why money shouldn't be "handed out to poor people" - thats even more complex if you are looking for a complete answer.

In a free market (or near-free regulated market), money is used to represent value that exists in the ecnomy. This value comes from creation, sale and provision of goods and services. Those who provide more valuable goods and services, or those who take greater risks (entreprenurs) are rewarded with profit in the form of money.

In terms you'd better understand:

How fair would it be if everybody in your class got 60% on a math test regardless of how many answers they got right? Thats what 'giving money to poor people' is, giving to those the market deemed unworthy of it.

Answer 3

Our "government" already prints worthless money, the difference is that they...give it to rich people and big business.

Answer 4

You do that and we will all quit our jobs, nothing will get done and we will all starve to death within a year.

Why work if all is free?

Answer 5

In basic terms, if you print lots of money then there will be a lot more spending. This extra demand will compete with supply so there will be less goods for people to buy and this will drive prices up massively. Price increase is called inflation and if this gets too high then people can't afford to buy everyday goods.

Printing money on this scale inevitably leads to disaster. History has hundreds of examples of prices increasing so much quicker than the value of money that people end up spending a week's wages to get a loaf of bread.

Hope that helps!

Answer 6

I'm no financial expert, but just printing money would significantly drop the overall value of the dollar.  And, I don't know if this is still true, but money used to be backed by gold.

Answer 7

If they do that, it causes massive inflation.

It's happened before in history. It doesn't help anything, because you end up paying $1,000 for a loaf of bread... stuff like that.

I'm not kidding.