"They can print a $100 bill for less than $1 then go exchange that dollar for $100 worth of goods or services."
And you see no problem with this? The bottom line is that the person getting that $100 bill in your scenario is only getting something that has a value of $1.
Let's imagine that a country's economy consisted solely of bread and dollars. No other item is produced in that nation, except bread. The nation makes 500 loaves of bread a year, for which the going price of bread is $1 each. That nation makes $500 annually. Fortunately, this is enough for the citizens to have a decent standard of living. If the citizens produce 1000 loaves, then the government must keep $1000 circulating in the economy to keep inflation stable. However, one day the government decides it will print out 90 extra $100 bills and places it into circulation. Suddenly, with $10,000 floating around out there, the cost of bread soars to $100/loaf. Since $100 only buys a loaf of bread whereas once only $1 was needed, the dollar has lost its purchasing power.
Money can be made out of thin air, but the value can't be created out of thin air. There should be no more money created by a nation than the sum value of all goods and services produced by that nation. We can give 1,000 cars to England, but we must receive something of equal value in return. They must give the same amount of goods and services in return, or a currency that is worth the same amount. Currency only serves as an universal medium for which barters are made. I will sell you my car for something of equal value. You offer me a specific amount of gold, which I know will later buy me something of equal value, and it saves you the hassle of finding something I want at that moment to complete the transaction. I can use the gold later with just about anyone, so it has that value. Giving me paper money which doesn't have any associated goods or services tied to its value won't do.
Having a money tree in the form of a national mint that prints off money indiscretionarily will not keep any economy financially stable. It's why we need more money to buy the same barrel of oil we were buying in 1920. Our currency is fast becoming worthless.
Re: America is dead
Member #: 40846
Registered: 9/19/2005
Posted:
1493
Name:
Duane Vick
Name:
Duane Vick
Company:
Self-Employed
Occupation:
Installer
Location:
Phoenix AZ
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