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    Can A Country Print Money and Get Rich

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    VinodKumar
    The document discusses why governments cannot simply print and distribute money to citizens. While quantitative easing is used during recessions to stimulate the economy, printing too much money can cause high inflation and even hyperinflation. There is no fixed rule for how much money a country can print, but central banks generally aim to print 2-3% of GDP while avoiding factors that can devalue the currency, such as large fiscal deficits, low exports, and high interest rates.

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    Can A Country Print Money and Get Rich

    Uploaded by

    VinodKumar
    16 views1 page
    The document discusses why governments cannot simply print and distribute money to citizens. While quantitative easing is used during recessions to stimulate the economy, printing too much money can cause high inflation and even hyperinflation. There is no fixed rule for how much money a country can print, but central banks generally aim to print 2-3% of GDP while avoiding factors that can devalue the currency, such as large fiscal deficits, low exports, and high interest rates.

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    Can a Country print Money and get Rich

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    Can a Country print Money and get Rich

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    The document discusses why governments cannot simply print and distribute money to citizens. While quantitative easing is used during recessions to stimulate the economy, printing too much money can cause high inflation and even hyperinflation. There is no fixed rule for how much money a country can print, but central banks generally aim to print 2-3% of GDP while avoiding factors that can devalue the currency, such as large fiscal deficits, low exports, and high interest rates.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    16 views1 page

    Can A Country Print Money and Get Rich

    Uploaded by

    VinodKumar
    The document discusses why governments cannot simply print and distribute money to citizens. While quantitative easing is used during recessions to stimulate the economy, printing too much money can cause high inflation and even hyperinflation. There is no fixed rule for how much money a country can print, but central banks generally aim to print 2-3% of GDP while avoiding factors that can devalue the currency, such as large fiscal deficits, low exports, and high interest rates.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 1

    When I was kid I used to wonder what stops government from printing money?

    Can’t a country just print money and distribute that money to its citizens?

    We used to hear that Mr X is earning more than Mr Y. So Mr. X is richer than Mr.Y.
    Rich and poor is decided on the basis of money one possesses. So it would be
    wonderful if government decides to distribute money to everyone so that
    everyone lives a comfortable life!!

    In fact, in recessionary times – countries do resort to printing money, or what is


    known as Quantitative Easing (QE), – a term that became popular just after the
    recession in 2008. But, that measure is only for extreme situations, and is also
    considered dangerous because printing money causes inflation in an economy,
    and if you print too much money you can get hyper – inflation also.

    Example : Almost 2-3 years back 3 eggs could have cost you 100 billion dollar
    “Zimbabwe” bank note. So basically we are talking about total devaluation of
    currency. Off course this is extreme but it shows the capability of inflation beast.

    What determines the amount of money a country


    can print?
    There is no fixed yard stick which determines the amount of printed money by
    central bank. It should be sufficient to make transfer of goods and services
    smooth and at the same time restore the value of currency.

    Value of currency depends on many factors e.g. net exports, Current and fiscal
    deficit, Interest rate in the economy among many moving parameters.

    Generally speaking central bank prints almost 2-3% money of total GDP. But this
    amount of money varies a lot from economy to economy. Mature or developed
    market prints 2-3% of their GDP. Emerging economy like India has much more
    than 2-3% money in circulation.

    Black money plays a big role in in currency circulation and hence amount of
    money available in the legal channel.

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