Why can't the government
Print money to pay off a countries debt.
by: Gael Calderon ,Bryan Phillips
The reason why the government cant just print money is because it leads to inflation.
inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. When the price level rises , each unit of currency buys fewer goods and services . from -google search wiki. So an increase in supply leads to a fall in demand, and therefor a fall in price. So the more money in the economy, the lower value of each dollar. (picture 1). Another reason to why this leads to a rise in prices is because more money in the economy causes a shift in the demand curve for goods and services but because this isn't matched by an increase in economic output prices must rise (picture 2).
Countries with highest inflation rates
a country with a healthy inflation rate is around 0-5%. A country with a 3% inflation rate has market prices double every 23 years. A country is considered to go into hyperinflation when their inflation rate is above 50% Hyperinflation - monetary inflation occurring at a very high rate. from google search wiki. With this in mind, here are the countries with the worst inflation rates in history
3. Yugoslavia - 1994
Yugoslavia's inflation rate, at its peak was 313,000,000%, with market prices doubling every 34 hours
2. Zimbabwe - 2008
Zimbabwe's inflation rate at it`s peak was 79,000,000,000% monthly. with market prices doubling every 24 hours. It got so bad that people were literary using wheel barrels full of money to buy a loaf of bread.
1. Hungary 1946
Hungary`s inflation 13.6,000,000,000,000,000%. With market prices doubling every 15 hours. This has led to the highest denomination bank note ever printed, the 100 quintillion pengo (Hungarian money). The bank notes lost so much value that if you took all of the money in Hungary in 1946 it would be worth 1/10 of a U.S. penny
The effects of hyperinflation on the economy
Currency exchange rates worsen, and businesses suffer as import costs rise. Unemployment rises, as does the cost of living. In Zimbabwe, hyperinflation attacked the economy in 2007 and 2008. “A loaf of bread now costs what 12 new cars did a decade ago,” noted the "Economic Times" in June 2008.-Chron.com
Why cant everyone be rich?
To be rich means to have a lot of stuff like cars, land, a big house, and of coarse, money.
Earths population is over 7 billion, if everyone was rich everyone would have access to rare items a regular person could not afford ,but there is only a limited amount of that item, and it takes man labor to get the materials needed, to transport the materials, and to put the materials together. All that rare material might run out if everyone byes it, so the most reasonable thing to do is to increase the price of the rare material to make it harder to buy , then more money is printed so people can afford the rare materials again, and that would lead to inflation.
In Conclusion
So that is why the government cant just print money to pay off debt, IT DOES NOT END WELL.
If money grew on trees . . .It would be as valuable as leaves.
-quote from Wonder Why
info from zerohedge.com - google search wiki - helpful video - why cant the government print money to pay off debt. made by wonder why