Money

[Attax]

Alright, I enjoy politics and such but one thing I have never understood in our economy is if we need money why do we not just print more off? yeah about inflation and stuff but how does having more money make its value go down? I understand how the more of one thing there is the less it is worth but how does this affect money?

[byee]

The amount of money the Gov't prints has to be based on assets, securities, gold and what not. For any currency to have value, it has to be backed by something, so the Gov't can't just print more. The amount in circulation needs to reflect what securities the Gov't actually has.

[Callwaiting]

This would only work on a small scale, or if it was only distributed to a small number of people. It works by having everything in scale, a ratio of something else. Say bread was sold for a 50,000th of the average salary, then the government distributes more cash and the average salary goes up 10%. Bread would then go up 10%, making nobody better off.
Like IAMSAM said, the money has to have an actual backing to it, the physical money itself is worth nothing.

[Whisper]

http://upload.wikimedia.org/wikipedia/commons/c/ca/Inflation-1923.jpg
Thats germany during the war
Shes burning a TON of cash because it burns longer than the wood she could afford with that would


That's called inflation
They used to carry huge amounts around there's one story about a woman who pushing a stroller PACKED full of cash around
They stole the stroller and left all the cash because it was worthless

http://upload.wikimedia.org/wikipedia/commons/thumb/6/6e/World_Inflation_rate_2007.PNG/800px-World_Inflation_rate_2007.PNG
Inflation Rates World Wide 2007


Zimbabwe's inflation is like 1200%
http://paradoxoff.com/files/2008/03/zimbabwe-inflation.jpg

[Maverick]

The amount of money the Gov't prints has to be based on assets, securities, gold and what not. For any currency to have value, it has to be backed by something, so the Gov't can't just print more. The amount in circulation needs to reflect what securities the Gov't actually has.
That's the biggest misconception people have about the US dollar. Ever since 1971 the dollar is no longer backed by gold. Its no longer backed by anything but the faith and credit of the government. Its backed by no commodities but confidence in that people will believe it has actual value when it doesn't.

All the dollars people have at the end of the day are just pieces of paper - just that some people have more pieces of paper than others. The Federal Reserve has the power to print as many dollars as it wants with no limit.

When new money is printed, the people that get to use it first benefit because it still retains the value. But as the money is spent and circulated in the economy the increase in money supply dilutes the value of all of the dollars out there so to make up for the devalued dollar, prices rise - inflation.

That's why I am for a gold standard. It puts limits on the amount of money the government can create and forces it to spend wisely.

[CaptainObvious]

Alright, I enjoy politics and such but one thing I have never understood in our economy is if we need money why do we not just print more off? yeah about inflation and stuff but how does having more money make its value go down? I understand how the more of one thing there is the less it is worth but how does this affect money?

Money is only as good as the things you can buy with it. If there's initially x dollars in the economy, and x goods in the economy, and the amount of money grows to 2x, it is only half as valuable, because there's still only x amount of goods.

Look up inflation on Wiki, read through it carefully.

[Attax]

thanks guys! but then on the post about how our monetary system is based off of our own 'credit' then could we not just print off 7 trillion dollars and ship it out to those countries who we have huge debts to so our credit could increase making thm have more money too ?

Sorry I do not know much about the economy as i do governmental stuff, politics :D

[0=]

Zimbabwe's inflation is like 1200%

I think it's actually 11,000,000% now. They're in deep shit.

[Attax]

bring 5 us dollars and be richer than a zimbabwean millionaire!

[Maverick]

thanks guys! but then on the post about how our monetary system is based off of our own 'credit' then could we not just print off 7 trillion dollars and ship it out to those countries who we have huge debts to so our credit could increase making thm have more money too ?

Sorry I do not know much about the economy as i do governmental stuff, politics :D
Ah if only it were that simple. Printing 7 trillion dollars would cause foreigners to lose complete confidence in the currency and ultimately make the dollar (or the perception of value in the dollar) worthless.

[Falk 'Ace' Flyer]

On top of that, the cost of all commodities will go up because there's more money around, yet salaries seem to stay the same...

[southcarolina]

well paper money and coins are just notes, like I.O.U.'s that get passed on from person to person

[Attax]

aaah . . . lol mccain supporter, sorry I lol'ed

but anyways, yeah so they couldn't cover it up cause I just remembered the serial numbers on dollars, I was gonna say that couldn't they print it in secret lol, I am dumb sometimes