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A silly question in regards to national debt?
OK, just humor me here. Our U.S. Treasury prints money. But our government has so much debt. So my question is: why can't they just print enough money to off the debt? Maybe my simple minded brain doesn't understand complicated government stuff, so maybe you guys can help me out? OK I mean, I understand, we can't print so much money and have it float around, because that'll lower its value. Like when you have too much of something, you don't want it anymore. But what I'm saying is, is it that impossible that they can just print ENOUGH money to pay of the debt or something? Can you explain why we can't?
Thank you everyone for your answers. I guess inflation would be an answer to my question. I guess I was thinking if we owe China, just pay them by printing more money, maybe not all at once, but little by little? The money will be floating in China, not here. LOL!
5 Answers
- robert_dodLv 610 years agoFavorite Answer
Money is paper. It only has value if people ascribe value to it. That they trust it.
Now (lets get rid of all those zeros). If you have $100 dollars, and want to buy 100 candy bars, each one would cost $1.00.
Now, lets say that there are $1,000. And still, 100 candy bars. Nothing else has changed. Each candy bar is exactly the same size, same ingredients. All is the same.
Now, to buy those same 100 candy bars, they would cost $10 each. Not because the candy bars changed, but because there were so many more pieces of paper (dollars) floating around, that each one is worth less.
On a national level, this is what would happen. You still have dollars, but each one is worth less.
NOW, it is not unusual for the government to increase the number of dollars by varioous methods (sometimes caused quantitative easing). Here's why.
Sometimes, banks lend all the dollars that are deposited (actually more than are deposited) to other people to buy houses, equipment, expand, etc. So the money is in the economy.
But when banks do not lend, those dollars just sit in the bank vault. They exist, but are not being used.
When this happens, and the government increases the number of dollars in the economy, it does not devalue the dollar because of all the money sitting idle in the bank vault.
Some people are concerned, however, that EVENTUALLY, the banks will start lending more dollars, the money in their vault will fly out into the economy, and THEN you have many more dollars available for the same goods. The price (number of pieces of paper) needed to buy things go up, because each piece of paper (dollar) is worth less.
And that ... my dear ... is inflation.
Good luck (and I was not intending to demean you, but my explanation is a very simplified explanation that is covered in 2 semesters of college economics. While simple, there are MANY variables we did not discuss above)
- alcan52Lv 510 years ago
You are asking the right question. But the answer is too long to explain here. Watch the following video and you will understand the answer you are looking for. Its called The Secret of Oz. http://www.youtube.com/watch?v=swkq2E8mswI I don't agree with all the solutions in this film but the information is a great starting point to understanding the problem. Take the time and watch this video.
- MikeLv 710 years ago
If you flood the United States with 15 trillion dollars then inflation will increase like crazy and the value of the dollar will fall. It would cost $150 for a loaf of bread.
- KMcGLv 710 years ago
Because printing more money just means that the money that's already in circulation becomes worth less. It is not "making" more money. So instead of a gallon of gas costing you $3.50, it will now cost $7.00 because your dollars are worth less. BTW not a silly question, lots of people do not understand such things.
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- Anonymous10 years ago
Many feel this way but it would just deflate the U S dollar much like a women who has ''open 24 hours'' on her knees, who wants it?