Thanks for the reply bob....(I'd suggest not looking down
) I still do not understand though how simply printing paper, (and it is only paper... It holds no magical powers) can cause so much chaos? What a world we live in!
If you print more money, there will be more money to go around. Prices for food, fuel, consumer goods, cars and houses will go up even more. Sellers will look for people with more money to which to sell their goods. They will, therefore, raise their prices. It's not something your local retailer or shop will do. It's something that manufacturers, suppliers and mining firms will do.
I am not an accountant/economist, but I am saying even someone like me, who has not studied economics and accountancy at a university level can understand this in a rather crude way. I have a fair idea what it means when creditors (ie. I mean bank depositors) incur interest on debtors (ie. I mean banks), but I don't know what accountants do to record what they do when they "print money."
So to put it crudely, printing $100 that isn't part of normal "accounting transactions" and isn't interest isn't going to do much, but printing $100 million will most probably send prices soaring.
It works according to the principle of supply and demand. You sell to the highest bidder. Again, it's not something you are likely to see local retailers and shops doing. It is something that happens in the supply chain of the economy, and this is something the ordinary consumer would know little about unless he has a birds-eye view of the economics in his country.
That's because individual consumers only buy individual items, whereas wholesalers, retailers, manufacturers, supplies and mining firms trade and provide services in larger quantities. They work with large quantities of things.
There is competition among these wholesalers, retailers, manufacturers, supplies and mining firms. A client will seek a supplier/provider who offers the lowest prices. A supplier/provider will seek client firms who offer to pay higher prices.
By printing $100 million, there is $100 million more to go around. Some people will suddenly have "more buying power." But it is only short term. Once this $100 millions spreads throughout the entire country, prices will have shot up and suppliers/providers are all of a sudden charging more for their goods and services. Clients and customers will have to pay more.
Consumers that only yesterday were living comfortably are now all of a sudden struggling to pay their living costs.
Let's say the government, or the national bank foolishly and stupidly decides to print another $100 million. Again, it's only short term gain for the people who get the money. The prices will go up again. Suppliers/providers now charge even more for their services.
Suppose the government, in order to stay in power, decides to repeat this process ad nauseum. I guess you see the pattern.
That's why a country's banks have to choose their interest rates carefully. It's to prevent hyperinflation, where prices just shoot up beyond control. Under such conditions, an economy simply spirals out of control.
That's why instead of printing money out and putting that into circulation, governments unleash economic stimulus packages. They use whatever money is already in the economy that they have either acquired through taxes or borrowing (ie. from China $$$$$
) and China has, in past years, been all to happy to lend because of its trade surplus.
China's money has paid for the U.S.'s war in Iraq and Afghanistan. It has paid for U.S. military spending and is now paying for the U.S. government's economic stimulus package. Western governments are borrowing heavily from China to keep their economies afloat.
I can understand how China feels about this.
The decadent foreign devils have crashed and burned and now they want to drag China down with it. China doesn't want its trade surplus wasted on problems that foreign countries are having. It probably . . . wants to spend it on its own military industrial complex.
Heck, how did the U.S. get into this mess in the first place? It's either George W. Bush choosing to embark on expensive wars or it's Americans taking home loans they know they will never be able to pay back. How could this superpower nation go so wrong?
It's all just shambolic.
Shame on America. Shame on this country with a crappy public education system. This country with so many social problems, with unruly youth, whose crimes rates are so high, which has so many killings on its educational institutions, and with so many religious fundamentalists. Shame. Shame. Shame.
I think America needs to sit down for a good ol' Bible lesson.
with Daddy and Mummy saying tsk tsk tsk. It needs to plunge its face deep into the sand and dirt and cry long and hard:
I'm a wreck! I'm a failure! The world doesn't love me anymore! I'm not who people thought I was! I need to run away and hide for a while . . . in my Mummy's wardrobe . . . I used to be proud, but now I'm so ashamed.
God is not giving any blessings today, so nobody say "God bless America." It's detention. Someone deserves a reprimand. Someone deserves to be spanked . . . with a candlestick . . . It's
God curse America. It's time to admonish and lecture America on its faults.
