FundRobot » Child Investment Accounts » Why can't we just print off more money to pay off debt?

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Old   #1 (permalink)
 
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Default just print off more money to pay off debt

My teacher has been telling the class about the debt the U.S. is in. So if that is true...Why can't we just print off more money to pay off debt?

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Old   #2 (permalink)
 
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Every dollar costs double of what's it's worth. So they make a pennny, and it costs 2 cents. When they make a hundred dollar bill, it costs them 2 hundred dollars to make one. Get it?
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Old   #3 (permalink)
 
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Default just print off more money to pay off debt

We are already creating a lot of money. There is only so much economic activity to support the currency. If we print too much, it will lead to inflation (there will be the same amount of products, but more money so the cost per product will just go up) and no one will get ahead anyway.

I strongly suspect that Molly is on drugs. That answer makes no sense whatsoever. It doesn't cost $200 to print a $100 bill.
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It causes inflation. For every dollar printed assume that the cost of products will rise because of more money in the market place. Google Germany after World War 1 to see a better example of printing money will do. This is a complicated thing to explain but the basic supply and demand formula comes in to play.
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You need to study history and economics.

The way we got into this debt is by printing too much money, and issuing too many bonds, rather than reduce spending or increasing taxes.

There is a payment day coming. Life, as we have known it, may be lost forever.
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It causes inflation. Each country produces a certain amount of stuff in a year. There needs to be enough money floating around to buy it all, but no more than that.

Second, the banks have more control of "the money supply" than the government does.
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Default just print off more money to pay off debt

"Printing money" does not mean producing pictures of dead presidents on green paper (although that is a SMALL part of the equation. Most money is just numbers moving around in computers.)

You (or your parents) temporarily print money when they use a credit card. They may have $100 in their wallet, but when they pay with credit they can still go down the street and spend the $100 cash; so they have acquired $200 worth of goods with only $100 real money in their pocket.

Another example is to have zero in your checking account, then write a (bad) check for $100. When the bank tells you you are overdrawn, you cannot then write them another $100 check from the same account to clear the debt. You will still be $100 overdrawn (in debt to the bank).

But the U S government has (in a sense) a bottomless checking account and a limitless credit card. {It is called "the full faith and credit of the U S government" and is why people can cash their tax refund checks even though the U S is $17T in debt (and going higher).} When the government sends money to people without the money in the bank, that is printing money. {Pay raises for the military, other government benefits, new tax breaks, etc [ see below, too. ] }

The mathematical answer is to raise taxes, but spend less. But this can stall the economy, resulting in less tax revenue, and more need for government funds (for the poor - as in welfare, extended unemployment benefits, $400 make work pay stimulus, $8,000 credit to buy a house credit, EIC, college tuition interest tax breaks, the extra $1000 per child tax credit that was started (say) 12 years ago,,,,). << It is at the point where 50% of filers do not pay any tax (which could be good or bad, depending....)

And if everyone has more money (thanks to government handouts, and lower tax rates) prices to rise so that merchants, landlords, etc, can get more of that money. There is also the issue of the U S debt growing because we owe interest on that debt. And all of that does cause inflation. {Why should a merchant lower his price to induce you to buy if you want the product, and have a credit card with which to "pay" for it(?)}
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Default just print off more money to pay off debt

I&#x27;m going to try and answer this in the most simple way I can. First of all, wealth and money (ie. dollars) are completely different things. As a nation the U.S. Has so much wealth, but it isn&#x27;t infinite, our dollars simply represent that wealth. Think of this like a fraction where our wealth is the numerator (top number) and our dollars are the denominator (bottom number) if our wealth is 1 and we have 2 dollars to represent that 1 then our fraction is 1&#x2F;2 now if we have 2000 dollars to represent that 1 wealth, we now have a 1&#x2F;2000 fraction meaning each dollar is 1000 times less valuable than before. I hope that helps.
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