As as we know, the FED does not actually print dollar bills anymore; they just add a few extra zeroes to the current account balance in their computer system each month? So, why don’t/can’t the other countries of the world just do the same? Does anyone know?
Because they all base their currency on ours and it is convenient.
This is the reason.
This is a girl in Germany playing building blocks with bundles of money, because it became essentially worthless (a loaf of bread cost 200,000 million marks). This was during the inflation crisis of 1923. It happened because there was a flood of paper money into the economy combined with a general strike that halted manufacturing. An expansion of the money supply, with no proportionate expansion of goods and services results in money drastically loosing its value (hyperinflation). Ironic seeing as paper money has no intrinsic value anyway. But this is the reason countries do not create vast amounts of money in this way.
This woman from around the same time is burning paper money as fuel, which was all it was good for:
No, that is not the answer. It is not "convenient" for a country to borrow money from the IMF for example, with all sorts of conditions attached, when they could just create money out of thin air like the USA does.
My question is .. what is it that stops them from doing that?
If the USA can "print" apparently unlimited amouts of money, why can't Mali, Peru, Argentina or any country do the same?
Printing money has negative consequences, it's not free. Everything that one country does affects its currency's exchange rate with other currencies, which changes the prices of imports, exports, goods, affects inflation, etc...
So you're saying they could do it, but choose not too? The USA has been bankrupt for years, but continues to be able to create its own funds and so, to afford anything it wants, because it simple "creates" money out of thin air, and because of this, on the surface at least, it is still the world's richest country.
So if the USA can do it, what stops others from doing the same? After all, its only a matter of typing a few extra zeroes into a computer systen, isn't it?
The USA is not bankrupt. Total debt (public, household, corporate debt) is close to 300% of GDP. But the USA is a very resource rich country. So assets (the other side of the balance sheet) are probably in the range of 800% of GDP. As long as the US is able to persuade lenders, that they will do everything to allow exploitation of resources and allow access to fixed assets (real estate, working capital, ..) the US will be trustworthy and printing money will only have limited inflationary impact.
So adding some 100 Billion per month to public debt will be less than 0.1 % in relation to asset collateral.
Things get dangerous if total debt rises into the range of 350% of GDP. In case of bankruptcy any pile of assets will just evaporate to a third of its nominal value. Whatever happens to a bankrupt company will apply to a sovereign economy as well.
Apply figures from above to countries like Mali, Peru or Argentina and you will easily find out that their respective asset situation does not allow bold money printing.
Causes inflation, the more money the less value. Has to be not hot and not too cold, but just right. Besides they would get couped.
by Ralph Deeds4 years ago
Economists Agree: Solutions Are ElusiveBy EDUARDO PORTERPublished: April 23, 2013 "Last week the International Monetary Fund hosted a conference of some of the world’s top macroeconomists to assess...
by Doug Hughes6 years ago
In 20 years, the history books will call this the 2nd depression. We are in a liquidity trap, according to Paul Krugman, nobel-prize economist. That’s central to the problem. “The term liquidity trap is used in...
by tony07247 years ago
They want to propose this at the United Nations per the Drudge Report
by rhamson22 months ago
"All we know (based on leaks) is (1) it establishes an independent tribunal that can force nations to pay global corporations any lost profits due to that nation’s health, safety, environmental, labor, or...
by Brie Hoffman6 hours ago
There is a new social media site where you can post articles and photo's called steemit.com and you can make a good amount of money on it.
by Castlepaloma6 years ago
Most predominate religious countries are more war like, yet Religions claim they have the higher moral grounds. USA has 5% of the world population in which is 85% Religious and they have 50% of the world’s military...
Copyright © 2017 HubPages Inc. and respective owners.
Other product and company names shown may be trademarks of their respective owners.
HubPages® is a registered Service Mark of HubPages, Inc.