Why can’t Govt. print more money?

Why can’t print money??

We can produce more food.

Everyone afford Lamborghini.

Everyone afford helicopter as a taxi.

Everybody can buy a mansion in Singapore.

Everyone will have 100 kg of gold in the garage.

Ok, let’s allow everyone to have all these.

Do you think can we supply all these to everyone?

Ok take 100kg gold and live in an Iceland. is it possible?

Here in this situation, gold doesn’t have value in this place, so it should be exchanged for something which has more utility. for example food.

One more example. Let’s think we have doubled the money print. Now see the economic dance.

As the circulation of money increases, they will start buying more and more of the same product (JAM). Whereas the company can only produce 100 UNITS of JAM. When it sees the demand, Companies start to increase the price from Rs. 10 to Rs. 20. Because of the high price of the same product makes it unaffordable to some people and they will stop buying that product.

Inflation with cost push and demand pull effect
Inflation with cost-push and demand-pull effect

This is called inflation. When too much money chases too few goods. The purchasing power of a man decreasing over the year.

As Print money circulation is increasing. (Hypothetical)

Same way every country have their resources and strategies to cope up with the world. They get profits and losses in the same currency they print. To be in the market and compete with other countries they depreciate and appreciate their currency value. (Rs. 65 = 1$).

Suppose you made print and cleared debt.

If India and China are the vehicle exporters to the world India sells car for 2000 $ ( 1$ = 80 INR)

China sells car for 2000 $ ( 1$ = 100 INR)

Even if India is competitive by the price but because of high money circulation over the world, it will become easily accessible to everyone. But being an Indian your resources are being sold cheaply to the world.

If you see the opportunity cost of the same resource might be much higher than this but we can’t stop it again it ll lead to inflation. If we really want to compete with other countries we can increase our export than imports.

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