Why don't poor countries print more money to get richer?
Some countries have done this. For example, Zimbabwe in Africa and Venezuela in South America printed more money to try to boost the economy.
More money, more problems
At the same time with the money printer increasing the speed of operation, the price also increases faster, until these countries fell into what is called "hyperinflation". That's when prices rise with an incredible figure for a year.
When Zimbabwe fell into hyperinflation in 2008, domestic prices increased to 231 million% in just one year. Imagine that a candy costing one dong in Zimbabwe would cost 231 million dongs in just one year. Even the value of printing paper was higher than the number printed on it.
Prices are pushed up
To become richer, a country must produce and sell more products, regardless of goods or services. This helps the country to print more money for people to buy more surplus goods. However, if a country prints more money without increasing production, prices will go up. For example, a special Star Wars toy set produced in 1970 could be of much higher value. There are no factories to produce this model of toys. Even if people have more money, it doesn't mean more people can buy it. Sellers will continue to raise prices.
Currently, only one country can be richer by printing more money, and that's the United States (even if they're already rich). The reason is that there are many valuable items traded around the world, including gold and oil, which are valued in US dollars. If the US wants to buy more, they just print more money. However, if the US dollar is printed too much, the price of goods will also increase.
Too much, too fast
Of course, poor countries can only print their own currencies, unable to print the US dollar. If they print more money, prices will rise very fast and people will stop using that currency. Instead, people will use goods to exchange with each other or ask to pay in US dollars. This happened in Zimbabwe and Venezuela along with other countries that were in hyperinflation. Venezuela tried to protect people from hyperinflation by passing laws to keep prices for essential goods like food and medicine. However, it caused these items to be wiped out of stores.
Too little money can cause commodity prices to fall, this is a bad signal. However, printing more money without production will cause prices to rise, which is also a bad signal. Therefore, it is not surprising that economics is considered a gloomy science.
By: Grace White