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Ankita Katdare
Ankita Katdare • Sep 29, 2014

Why can't governments print money and create more wealth or move out of debt?

The other day one of my friends (who has no knowledge about the finance system and is just 14 years old) brought the topic about printing money. Her question was if the Reserve Bank of India can print and store money, why doesn't it simply print bundles and bundles of it and distribute it to the under-privileged sections of the society or get the country out of debt (a term she often hears in the news)?

I couldn't understand where to start and how to explain the entire financial system in as simple words as possible (the reason being I myself am not sure if what I know is correct.).
That is one question that most young people think about at least once in their life.
For example - 10 year olds asking - "Why do we work? Can't we just withdraw money from the bank whenever we want?"

Can someone around here explain what are the disadvantages of printing more money? (and why that's not a solution to end financial crisis for any nation?)
avii
avii • Sep 29, 2014
I just searched in Youtube and got this:

Anoop Mathew
Anoop Mathew • Sep 29, 2014
From what I understand, the amount of money that is 'printed' is directly proportional to the resources available in the country that are 'valued' to be 'worth' that kind of money. There are rules which are thus followed to get it money printed and distributed into our hands as per our salary/income.
Ankita Katdare
Ankita Katdare • Sep 29, 2014
It gets complicated when they write things like these -

A country having debt isn't necessarily a bad thing.
National debt only becomes an issue if GDP isn't growing.
A more accurate way to see when the debt is an issue is the debt-GDP ration. In which the US is fine in that respect. Whereas Greece and Japan have debt-GDP ratios of over 150%, which is bad.

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