Home Discussion Forum A sincere question for everyone?

A sincere question for everyone?

This is not really a spiritual question from me today. I only ask this in this category because most of my friends & contacts are here in R & S. It has to do with the financial crisis that we are facing as a nation.
This question may come across as very stupid & basic to some of you who know a whole lot more than I do about how things work…….but I still need to ask it because I just don’t understand.
Question:
The US Mint prints all the money that exists in our country (correct so far?). What is money? It’s simply a piece of paper (or a coin) with a value printed on it (still correct?). Who delegates this value to the piece of paper & metal? The government.
So here comes the stupid question:
If we’re in such a crisis……..why not simply just print more money?
We’re giving value to a piece of paper as it is so………..why not?
Again……….forgive me for sounding like I’m in a fog here but………does anyone else see where I’m coming from with this?
Thanks,
-Primo
But how would printing more money cause inflation? This is what I don’t get
But what backs up gold?
Who puts a net worth on a rock?

29 COMMENTS

  1. if we print more money, the value of it will go down and bread will cost about 50$. and we will decline towards another depression.

  2. Are you serious- money is what is known as a promisary note. In effect an IOU. It works on the principle that for every banknote printed the bank must have the same amount in hard currency usually gold or other forms of capital such as investments to back it up.

  3. printing more money would cause the value of all existing money to go down.
    as people only have so much faith in the US governement to be able to pay back the value of what that money says, it will buy less and less and cause severe inflation.

  4. It has to do with the money supply. Printing more money would dilute the amount of money already in circulation and that would cause inflation.

  5. You know, I thought about his very things a few years ago. I don’t think it’s a stupid question, but maybe it’s because I don’t understand the system myself.

  6. You need some kind of backing for money to be worth anything though. It used to be the gold standard; you could only print money up to the value of the gold you possessed. These days I think it goes by infrastructure of the nation as a whole.
    There is a basis to currency beyond the paper. What you have suggested only works if you completely seal the borders. With a closed economy you can define the worth of money as you see fit. However, when interacting with other nations (as is the basis of all modern finance) that doesn’t hold water unfortunately.
    I’m sure someone with an economics background would be able to explain it better than me though.

  7. Well printing more leads to inflation because it devalues the money in the world market. A devalued dollar is a big part of the problem right now.
    These guys that are saying there is gold to back it are wrong. There hasn’t been since the 1930s. We could print more….it would just cause other problems.
    Added: Here’s the answer to the second part: Supply and Demand. Make more supply, of anything, the price goes down. So if you are in Europe and want to buy something in the US, there are more dollars to buy. You can then buy the dollars at a lower cost. The net result is that you pay less.
    From our side, the Euro would cost more because there are more dollars trying to buy Euros. So goods from Europe would in effect cost more. That means that any product with a foreign component would cost more.
    From there it spirals upward. People would demand more money to work, because things cost more. That forces the company to raise prices, and things cost even more and so on.

  8. Because it would lead to greatly increase inflation. The amount of goods such as food and oil in the market stays the same so you have don’t have more supply, you will have more demand though as people have money. You can wind up the way it is in some places in Africa where they printed more and more money with a loaf of bread costing about a milion of whatever their currency is. Their currency value in the world market is essentially nothing.

  9. Common misconception : the government controls the money
    Wrong in the united states The Federal Reserve controls the money, which is a private organization of Bankers. The government puts people into the Fed Resv to help regulate but it is still a private institution.
    You live in a free market economy so the government can’t just go interfering. Also if more money was put into circulation it would just devalue your currency because the value of money is based on the amount in circulation.

  10. I do. If you just throw a bunch of money out there, the money will not be worth as much.
    If we print more money, prices will rise such that we’re no better off than we were before. To see why, we’ll suppose this isn’t true, and that prices will not increase much when we drastically increase the money supply. Consider the case of the United States. Let’s suppose the United States decides to increase the money supply by mailing every man, woman, and child an envelope full of money. What would people do with that money? Some of that money will be saved, some might go toward paying off debt like mortgages and credit cards, but most of it will be spent. I know the first thing I’d do is go down to Walmart and buy an Xbox or PlayStation 2
    I’m not going to be the only one who runs out to buy an Xbox. This presents a problem for Walmart. Do they keep their prices the same and not have enough Xboxes to sell to everyone who wants one, or do they raise their prices? The obvious decision would be to raise their prices. If Walmart (along with everyone else) decides to raise their prices right away, we’d have massive inflation, and our money is now devalued. Since we’re trying to argue this won’t happen, we’ll suppose that Walmart and the other retailers don’t increase the price of Xboxes. For the price of Xboxes to hold steady, the supply of Xboxes will have to meet this added demand. If there are shortages, certainly the price will rise, as consumers who are denied an Xbox will offer to pay a price well in excess of what Walmart was formerly charging.
    For the retail price of the Xbox not to rise, we will need the producer of the Xbox, Microsoft, to increase production to satisfy this increased demand. Certainly this will not be technically possible in some industries, as there are capacity constraints (machinery, factory space) that limit how much production can be increased in a short period of time. We also need Microsoft not to charge retailers more per system, as this would cause Walmart to increase the price they charged to consumers, as we’re trying to create a scenario where the price of the Xbox won’t rise. By this logic we also need the per-unit costs of producing the Xbox not to rise. This is going to be difficult as the companies that Microsoft buys parts from are going to have the same pressures and incentives to raise prices that Walmart and Microsoft do. If Microsoft is going to produce more Xboxes, they’re going to need more man hours of labor and obtaining these hours cannot add too much (if anything) to their per-unit costs, or else they will be forced to raise the price they charge retailers.
    Wages are essentially prices; an hourly wage is the price a person charges for an hour of labor. It will be impossible for hourly wages to stay at their current levels. Some of the added labor may come through employees working overtime. This clearly has added costs, and workers are not likely to be as productive (per hour) if they’re working 12 hours a day than if they’re working 8. Many companies will need to hire extra labor. This demand for extra labor will cause wages to rise, as companies bid up wage rates in order to induce workers to work for their company. They’ll also have to induce their current workers not to retire. If you were given an envelope full of cash, do you think you’d put in more hours at work, or less? Labor market pressures require wages to increase, so product costs must increase as well.

  11. In a global economy all will do likewise and open money mints and soon currency will hold no value at all. It may be workable with the national arena but not in the world.
    Wealth generation or devaluation is largely controlled by the powers at large. The problem arises from infighting within the institutions for dominance and absolute control.
    Religion, State and Media had been largely ousted by the Banks, now being publicly discredited, derailed and looking at nationalisation and state ownership. Scandal mongering and character assassination works and in evidence..
    This being the religious section, liken it to Armageddon and the raging of the beats and dragon for power. The World Bank towers were toppled in 2001, currently their entire institution being derailed as we witness…
    Change of ownership should have little effect as the harlots running state and media have destroyed the force of Church and Treasury and look to rule a cesspit of debauchery, a veritable Sodom and Gomorrah in the creation, happening before your very eyes….

  12. The principle of the worth of money is that for every dollar printed there will be a dollrs worth of gold. (So theoretically if you take your dollar to the US treasury, they will give you a dollars worth of gold).
    If you start printing MORE money than actual gold you have, the money is worth less, people spend more to get the same goods. If you do not believe me, as Bob Mugabe from Zimbabwe, he has been doing it for years.

  13. let’s say everyone are billionaires…if you are a billionaire apple farmer and all your customers are billionaires, would you sell and apple for a dollar a piece? no, because a dollar would not be worth your while… you’ll probably sell it for a hundred dollars a piece.

  14. the usa has a certain amount of Gold etc. say they have (not real numbers) like 1 million dollars worth of Gold. if they print 1 million dollars of paper money then the dollar is worth 1 dollar, but if they print 2 million dollars of paper money then our dollar is worth 50 cents. this matters because if you are usa and your dollar is worth 50 cents. and im canada and my dollar is worth a dollar then you decide to buy 100 dollars worth of food from me then it will cost you 200 usa dollars to buy 100 canadian dollars worth of food from me. and if you take your food that you bought from me home to the usa and sold it in your store then you would have to charge double the money for it because you had to pay double to get it.

  15. Because the money is supposed to represent something of value. If you print more money but the actual thing of value has not increased then the value of the money has decreased. It might not immediately affect you but when manufacturers and importers try to buy stuff from other countries the other countries know that there is less value to the dollar and charge more, so these costs work back to you and you wind up paying more.

  16. The money is a paper representation for a certain amount of actual money/wealth. Printing more money is one thing, but if you aren’t also increasing the real wealth that it represents, then that real wealth starts to get devalued.
    And it causes inflation because it makes the dollar worth less. Now it takes more dollars to buy things. One dollar isn’t worth as much as it used to be worth, so you need more dollars to make up the difference.
    Or something like that. Economics isn’t my strong suit either and I may have totally screwed up my answer. LOL

  17. Your question is not stupid at all.
    First of all our paper money Used to be worth a lot more because for every dollar printed gold was “set aside” (that had worth) to represent that dollar. I think it was Green span that changed that. This in my opinion was a mistake.
    If we print more money it makes the “worth” of that dollar less. Instead of a “gold standard” our gov. now just says, “we are big, we are bad and we can back up that dollar”. Now they can’t so much.
    Now here’s something else to think about. We get our money from the federal reserve bank. Sounds like a government agency eh? It Isn’t.
    The Rockefeller’s made billions starting the federal reserve bank. Our gov. “buys” dollars from them . So for instance we buy a dollar bill (our gov.) for say $1.10. Add that up with all the currency out there and you have billions. THIS is the biggest reason for our debt in this country. NOT to other countries but to the Federal reserve bank.
    Most people do not know this-IMHO this is criminal and should have been stopped years ago.

  18. Like anything else, the value of something is often derived from its scarcity. For example platinum is not really that pretty but it is relatively rare, if it were more common that silver it would not be used as expensive jewelery. This is a simplistic example.
    Essentially there is a value associated with money, or other things, in the case of money, the more of it there is or the easier it is to get, the less valuable it is. Another way to look at this is, the crisis is not because there is not enough physical money, but because that money has lost value in global markets and because there was an artificial inflation of home values amongst other things.
    To answer your second question, if we simply printed more money, then people would be paid more, but the things that they produced would also have to cost more. For example if you double the salary of all gas station attendants, that means that the cost of gas has to go up to cover the increase in salary. This is true of everything else and sure everyone has more money, but they have to spend more for the same services and goods.

  19. I don’t think we can arbitrarily print more money.
    Currency is tied directly to gold reserves, and is kind of a ‘representation’ of the gold that can be used for legal tender.
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  20. To start, perhaps this idea of a crisis concerning the economy, is more closely related to the spiritual aspect of life than most of us realize. All that we are witnessing today, the financial problems, war, environment issues, intolerance and hatred amongst people, and everything in between, is all being given to us in order for us to find our way in seeking the purpose for life.
    There are so many different hardships and difficulties that people face all over the world and so many folks trying to find a way to both understand the reason for them and solutions in ending them. But perhaps the only real effort that will make a difference, comes from within each one of us.
    Here is a really great video that explains more if you are interested. Perhaps it might be really surprising to realize what causes all the negative things we are forced to endure and how we as individuals can bring the world to a place of peace and harmony, as it was created to be! Best wishes. Peace……River
    p.s. As for simply printing more money, I think if that would solve the problem, it would have been done a long time ago. It will be interesting to see what responses you get from those who might understand more about the economy and the supply and demand that it runs on.

  21. I KNOW DURING WAR WORLD II THAT THE NAZIS HAD JEWISH ARTISTS MAKING COUNTERFEIT MONEY FROM BRITAIN TO MAKE THEIR ECONOMY UNSTABLE AND COLLAPSE. SO THE MORE OF IT OUT THERE THAT THERE IS, THE LESS IT IS WORTH.

  22. Dude, I just feel sorry for you…..
    -hahahaha just kidding- I SAY THE EXACT SAME THING PRIMO! I always tell my hubby “why don’t they just print more money?” But it has something to do with the whole supply and demand thing – I don’t know much about it either. But then when I was a kid and my mom used to tell me she didn’t have any money I would always tell her “Just write a check” and I said this every single time. She eventually sighed everytime in disappointment that I never understood. Now my 6 yr old son says the same thing to me “write a check mom” when I say we don’t have the money and now tis my turn to SIGH.

  23. Primo this is a very good question. I used to think the same thing when I was younger. I felt like they should be able to print enough money that no one would be living at a poverty level. But what I didn’t know or understand at the time was that 100 dollar bill isn’t really worth anything. It is sort of like an IOU or a check. The blank check in my check books aren’t worth a dime. But when I put a dollar amount to it only then it has value. But it really don’t have any value unless I have secured enough money in my bank account to cover the amount of the check. The same principle applies to the dollar bill. The US treasury has to have enough gold to cover the amount of dollars that is printed every year. The dollar bill is a bank note that say this money is backed by the US treasury up to 1 dollar worth of gold.

  24. You have several decent answers but I want my points so here is my opinion.
    The reason we are in the mess we are in economically is because we do not have the capital/assets to cover our current debt. No one should ever spend more than they have. This includes everything owned and all cash. Americans (government and citizens) have so totally overspent on stuff that we are ready to become a third world country. We are selfish and spoiled. We think we deserve to have more when we already have too much. We are unsatisfied so we borrow to get more stuff that still doesn’t satisfy us. We go into bankruptcy so we don’t have to pay those bills and around and around we go. This type of bailout whether 700 billion or 7,000 shouldn’t happen. Capitalism doesn’t work if this is what we are doing. Let the system correct itself. The government needs to take a hands off approach. Businesses die. Let them. Other private entities will take that place. The government is not our savior. Jesus is. People need to take personal responsibility for themselves.

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