Pretty interesting discussion, guys. I followed less than 10% of this latter discussion. But it has provided useful pointers to learn more.

Ibime:

Running around in circles dude.

End of the day, QE was used to buy dodgy assets, exactly the same as SLS did. No money was physically created.

For the very same reason I stated previously, bailout of banks is an adequate scenario for QE if you dont wanna affect the velocity of money too detrimentally.

The difference between QE1 and QE2 is that QE2 has the added aim of fighting deflation (increase inflation), whilst QE1 did not affect inflation. It is hoped that QE2 would increase the velocity of money and subsequently inflation.

Likewise, SLS bailout had little or no effect on inflation for reasons I stated earlier because neither lending activity nor depositor activity was unduly affected in the short term.

Money was created in both cases. Difference, Sanusi gave money to banks; he said so in an interview. I will post if i can find the interview online. QE1 printed money but was used to buy treasuries. But I may accept its all pedantics.

Does anyone know that it costs about 1 naira to print 1 naira note? So there is neither a gain nor a loss per currency note printing. Unless you get a discount.

igbobuigbo:

Does anyone know that it costs about 1 naira to print 1 naira note? So there is neither a gain nor a loss per currency note printing. Unless you get a discount.

Printing money is not minting coins/notes, but just crediting and debiting some accounts the system (computer or paper), just a few clicks will do that

[img]http://2.s07.flagcounter.com/count/DymW/bg=ffffff/txt=ffffff/border=ffffff/columns=1/maxflags=1/viewers=3/labels=0/[/img]
[img]http://s07.flagcounter.com/count/DymW/bg=ffffff/txt=ffffff/border=ffffff/columns=1/maxflags=1/viewers=3/labels=0/[/img]

I'm pretty sure Mugabe employed the 'printing money' technique in Zimbabwe and now a bunch of plaintain goes for about 15,000 Zim. Dollars.
It will lead to massive inflation. Too much money will be in circulation

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Although i'v not got enough time to read much of the other comments and post/ideas.

****but with the porous economy and ecomonic policies we operate in this country, I think printing money makes sense.

If 500b ( God knows how many had been injected) worth of containers could infiltrate our economic system without any form distabilization; why go 'a-debt' when you could make these sorts of wads legitimately and boost the economy via the banking and financial system.

Most Central Banks in the world (at least those of the super economies) will never disclose the source of their 'stimulus package', they often go about it 'intelligently' but here in our continent/country, we follow economic poilicies that have long been trashed by the trend setters and end up remaining in the shackles of debt causing unneccesary burden for our future generations.

if we must develop our economy, I suggest we become more 'creative' in our policies and disclosure requirements.

kai! see analysis! NL boasts of some pretty brilliant brains, i must say!

i guess the summary is: printing money to offset debt=bad idea.

This is the picture. I hope it sends the message about the dangers of printing money that you don't have.

I am having difficulty uploading a picture. Any suggestions?

Here is a waiter bringing a $6 million dollar change for diners in Zimbabwe. That's what you get when you run the money printing press 24/7

Nigeria does not produce anything of value majorly apart from Oil & Gas that
the International community want.

Nigeria Borrows Dollars because that the reserve currency of the world based on[b] the Bretton woods agreement[/b] reached by world financial leaders in 1944 and thus became the currency of international trade.

Nigeria needs to import and importers only accept currency that is exchangeable on the international market ie Dollars, Euro's, Pounds & Yen and now Yuan

Nigeria Borrows because the current International Financial System is based on Debt not Credit

igbobuigbo:

Does anyone know that it costs about 1 naira to print 1 naira note? So there is neither a gain nor a loss per currency note printing. Unless you get a discount.

Does Nigeria have a 1 naira note? What you you mean?

ask Zimbabwe

This thread literally had me ROTFLMAO!

I see that business/economics is not our forte! Out!

Here is another one.  The German woman in this picture is using millions of German banknotes as fuel for her stove because it was cheaper than using the money to  buy coal.  The Germany hyperinflation of the Weimar Republic in the early 1920s was brought about when Germany resorted to the printing press as a result of the need to pay for war reparations after her defeat in  World War 1.  By November 1923 the German mark was 4 trillion marks to one dollar, and German children were playing in the streets with worthless money.

malabite:

Does Nigeria have a 1 naira note? What you you mean?

Whichever. It costs 100 naira to print a 100 naira note. So printing of money is not what you go into just like that.

Here is another one.  The German woman in this picture is using millions of German banknotes as fule for her stove because it was cheaper than using the money to buy coal.  The German hyperinflation of the Weimar Republic in the early 1920s was brought about when Germany resorted to the printing press as a result of the need to pay for war reparations after her defeat in World War 1.  By November 1923 the German mark was 4 trillion marks to the dollar and German children were playing in the streets with worthless money.

Economics don't operate in isolation, there are so many other factors that should be considered. Two countries could print exactly the same amount of money, but the difference in effect would be huge.

1. Generally 'inflation' [/b]will be the reply from most people. But anyone who intends to analyze this question appropriately should adopt a country as a basis. Not jumping from Zimbabwe to Nigeria to USA to Britain to Eurozone.

2.  Politics (not just local but international, stronger nations and their attitude towards weaker ones)

3. What is the balance of trade in the said country?

4. Of course every country prints a little more from time to time, but how frequent and how much?

5. I can remember the oil windfall of the mid 1970s. Udoji was appointed to determine how Nigeria could use its excess money to improve civil service ([b]Udoji commission) and he recommended huge salary increase and the effect was a jump in general price level, which eventually eroded the increase in nominal wages and brought about reduction in workers’ purchasing power (though Nigeria didn't print money in this case, but there was huge injection of into the flow)

6. At the moment 1 dollar exchanges for approximately 150 naira, God forbid it that I go to the bank tomorrow and someone tells me that I have 28,000 naira to get 1 dollar, because school children are ready to outbid me. Some 18 yeras old boys willing to pay 32,000 naira to get it.

I still don't understand how printing money to construct roads, provide electricity and some basic services will cause inflation. I understand you just can't print money and give to all citizens but surely you cannot go wrong with printing money to pay construction companies to construct roads, bridges and electric companies to provide electricity and water companies to provide water.  There are ways to print money that will result in a positive development for the local, state and federal economy.

I believe the western world has done this before and still doing it now.

Another one.  A young and very happy Zimbabwean billionaire courtesy of the printing press.

Ileke-IdI:

This thread literally had me ROTFLMAO!

I see that business/economics is not our forte! Out!

Here she is ooo. Long time, ma.

when you print more money you reach a point of inflation in the economy , and if the printing get's too much you get hyper -inflation , countries in Europe printed money after the wars and the result was hyper -inflation .bond is a good way of money creation , it ensures the balance of money flow in the economy

What a question

oncolor:

I still don't understand how printing money to construct roads, provide electricity and some basic services will cause inflation. I understand you just can't print money and give to all citizens but surely you cannot go wrong with printing money to pay construction companies to construct roads, bridges and electric companies to provide electricity and water companies to provide water.  There are ways to print money that will result in a positive development for the local, state and federal economy.

I believe the western world has done this before and still doing it now.

There is a simple way to understand  it.  Let's assume you own a construction company and you have been awarded a contract to build a road for the government. The contract value is 70 million naira and you are looking to clear a profit of 20% on the deal which comes down to 14 million naira.   You are hoping to use some of the money to build a nice retirement home in your home town and change your 8 year old car for a new Mercedes.   You have also spent money on buying materials for the project and  paying the engineers and subcontractors.  However the government is really broke and they resort  to the printing press like Mr Mugabe in Zimbabwe .  You get paid alright but you then realise that the money is hardly enough to pay for the cement for the foundation of your retirement home because the price of everything has gone up due to the increased amount of money in circulation.  It is what some Nigerians refer to as "water don pass garri.  I hope this helps.

You printing of money is not what is the cause of zimbawbwe inflation.   The print of money had nothing to do with it. It is bad government that lead to inflation in zimbabwe.  Ask any zimbabwe.

You can not print more money because you want to pay teachers salary, you cut down spending. You cut down on how much you are getting, you work out a budget for yourself.

You cut down on what you want. and if nigeria is going through this , you cancel all local government in Nigeria. And you give the money to state.  If you look at abia state from satellite picture. 1 man can run abia state, abia state should just be 1 local govt.

oncolor:

[b]I still don't understand how printing money to construct roads, provide electricity and some basic services will cause inflation. [/b]I understand you just can't print money and give to all citizens but surely you cannot go wrong with printing money to pay construction companies to construct roads, bridges and electric companies to provide electricity and water companies to provide water.  There are ways to print money that will result in a positive development for the local, state and federal economy.

I believe the western world has done this before and still doing it now.

Option 1
Government prints money and pays for essential services such as roads, electricty, education, etc.
The companies hired by the government go out and employ more workers
The employed workers will in turn have more money to pay for goods and services. Assuming that supply of goods and services remains constant, you will have more money chasing the same goods as a result of the increased supply of money in the economy. That is inflation. With investors aware that government is printing money, confidence is low and supply can sometimes decrease because no seller wants to sell goods knowing that the value of his/her holding will continue to go down.

Option 2
The same effect providing services and employment can be achieved through fiscal policies. In every country, there are individuals and corporations with spare capacity. These individuals and corporations have a few options when it comes to investing their excess funds. They can invest in equities, pay dividends, engage in share buy-backs, buy international assets, etc. The government through fiscal policies can encourage these individuals and corporations to invest in its economy buy lowering taxes, and interest rates for borrowing and other incentives. This is sometimes referred to as trickle down economics because when corporations and individuals invest in business enterprise, they employ workers, lease and buy assets which in turn boost the economy. For instance, Ireland boosted its economy (never mind the problems caused by Irish Banks) by levying a 12.5% corporation tax on business which led to investments by corporations such as Google, Microsoft, SAP, etc As the economy grows, demand and supply increase since sellers are always looking for markets to sell goods and services without losing the value of their holdings. With increased revenue from taxes, the government can pay for roads and other infrastructure without needing to print money needlessly.


So which option will you select?

Becomrich}:

You printing of money is not what is the cause of zimbawbwe inflation. The print of money had nothing to do with it. It is bad government that lead to inflation in zimbabwe. Ask any zimbabwe.

You can not print more money because you want to pay teachers salary, you cut down spending. You cut down on how much you are getting, you work out a budget for yourself.

You cut down on what you want. and if nigeria is going through this , you cancel all local government in Nigeria. And you give the money to state. If you look at abia state from satellite picture. 1 man can run abia state, abia state should just be 1 local govt.

Have you been out drinking tonight? Where do you think all those banknotes came from? Bad government indeed.

the nija government has the money to do many useful things in the country, they dont have to print or borrow, but it a pity that all the money always ends up in private pocket.

Katsumoto:

Option 1
Government prints money and pays for essential services such as roads, electricty, education, etc.
The companies hired by the government go out and employ more workers
The employed workers will in turn have more money to pay for goods and services. Assuming that supply of goods and services remains constant, you will have more money chasing the same goods as a result of the increased supply of money in the economy. That is inflation. With investors aware that government is printing money, confidence is low and supply can sometimes decrease because no seller wants to sell goods knowing that the value of his/her holding will continue to go down.

Option 2
The same effect providing services and employment can be achieved through fiscal policies. In every country, there are individuals and corporations with spare capacity. These individuals and corporations have a few options when it comes to investing their excess funds. They can invest in equities, pay dividends, engage in share buy-backs, buy international assets, etc. The government through fiscal policies can encourage these individuals and corporations to invest in its economy buy lowering taxes, and interest rates for borrowing and other incentives. This is sometimes referred to as trickle down economics because when corporations and individuals invest in business enterprise, they employ workers, lease and buy assets which in turn boost the economy. For instance, Ireland boosted its economy (never mind the problems caused by Irish Banks) by levying a 12.5% corporation tax on business which led to investments by corporations such as Google, Microsoft, SAP, etc As the economy grows, demand and supply increase since sellers are always looking for markets to sell goods and services without losing the value of their holdings. With increased revenue from taxes, the government can pay for roads and other infrastructure without needing to print money needlessly.


So which option will you select?

what do you mean.?, so even if the government borrow the money, is it not still going to give it out to contractors? or are you saying millions of workers will benefit from this. so how does this cause inflations?