Ebookmathswaec:


And borrowing the same huge amount won't do same?

Clearly you are uneducated and ignorant .

OP! to end up like Zimbabwe dey hungry u abi?

exlinklodge:



Am interested in your explanation about China devaluation of their currency and IMF wanting third world countries like our to devalue ours.

I know if Nigeria devalues it will be a gain to the advanced world since we are import based country, so they buy our goods cheaper while we buy theirs higher. But I don't understand how China gains more by devaluing their currency since they are export based country.

Could you shade more light on that?

China practically imports nothing. While countries like America buy plenty stuffs from China. America buys a lot of means when China devalues their currency, America have to pay more to buy from China.

Simply put - China de-valuate ( heir currency knowing a weaker yuan will boost their export against other nations that buy from China - including America which is why America didn't like it as most of their deals are more EXCHANGE deals.

Switzerland did same when they de-linked their economy from the Euro.

For instance if 5 yuan equals 1 dollar. This means when China sells something worth 1 dollar to America they get 5 yuan but when the the yuan is devalued, to say 6 yuan to one dollar, they get 6 yuan for one dollar but when they have to buy from the yanks, they spend less. This logic however only works for a very productivity economy as China's. They practically don't have to import but instead export.

In Nigeria terms, imagine we have to export so much crude and don't have to import much. We will buy making more money while spending less. China can afford it, Nigeria can't.

No country have the right to wake up n start printing currency. I think there is a policy that guides it..bankers in the house hive us a head hmmm

pocohantas:


You mean it?
Let me go read about it. I am more interested in how they resolved the inflation. I dey come *runs out of thread*

Lol.
Some people think "Being better off" is waking up one morning and flooding your country with its currency. It doesn't work that way. Infact, you'll end up being worse off.

If d CBN shud print dat amount of money in d naira equivalent, it will lead to inflation. Lets say d CBN prints d money give it to the FG, d govt in turn use it for project nd other things(government spending). We need to understand dat money moves in a circular flow, and government spending is a form of injection into d economy, simply put, govt spending pumps money into d economy. Now, excessive government spending cud lead to inflation whereby derz too much money in circulation, persistent increase in prices and too much money purchasing too few goods. The value of naira will fall in d domestic economy and dis can lead to total collapse of d domestic economy if inflation is not remedied. So,it better to avoid inflation or keep at a reasonable level...

Ebookmathswaec:


No. I mean Naira equivalent.

We can print to stimulate the economy under what is called quantitative easing but it is cheaper to borrow than print. $5.5 is about N4 trillion, factor in all the printing materials, labour, logistics etc it would be more than 6% to 7% interest on foreign loans. Also, there is a cap on how much you can print in an economy, this is proportional to your economy capacity. Same goes for other nations. In fact, the US has been printing since 2009 recession and just announced it would start balance sheet normalization of what is now $4.5 trillion in total. Same goes for EU, Japan, U.K.

Truckpusher:
Ayam not understanding you again oh.

Read your first and last paragraph and see how you've contradicted yourself with respect to Mr Jubrin's knee jack economic policies especially the strangulation of the dollar just to give the Naira a false sense of appreciation without an almost or near export margin by Nigeria which was one of his first imbecilic idiotic policies .

It won't make sense to you. Because you don't have any economical sense.

An export based economy can devalue their currency rather than print more money and still be better off. An example is China devaluating the yuan as they then make more money since they rarely have to import.

While Nigeria devaluing their currency can only lead lead cries since they have to import in foreign currencies.

Truckpusher:
Jesus!! you've lost your sense of humor.

Lol. funny dude.
Send me your CV, we might need you as our new CBN governor . Lol

I understand the Inflation bla bla bla but with the way things are going I don't think we will avoid buying a loan of bread for 200k unless there is a divine intervention.

samsard:
This dude skipped basic economics class in secondary school. And you wonder why they say the standard of education is very low in the country. SMH

tell us what u leanrt concerning this very topic then

Ensquare:
No country have the right to wake up n start printing currency. I think there is a policy that guides it..bankers in the house hive us a head hmmm

Yeah. CBN controls the volume of currency in the economy. If they notice there's too much money in the economy not backed by productivity they've used fiscal policies that'd reduce the volume of money in circulation.

Commercial banks are given orders to increase interest rate on loans. Government bonds are sold to reduce the volume of money in circulation through the open market. Bank reserve with CBN is increased and lot more. And someone thinks monies are printed just like that.

abescom:
China practically imports nothing. While countries like America buy plenty stuffs from China. America buys a lot of means when China devalues their currency, America have to pay more to buy from China.

Simply put - China de-valuate ( heir currency knowing a weaker yuan will boost their export against other nations that buy from China - including America which is why America didn't like it as most of their deals are more EXCHANGE deals.

Switzerland did same when they de-linked their economy from the Euro.

For instance if 5 yuan equals 1 dollar. This means when China sells something worth 1 dollar to America they get 5 yuan but when the the yuan is devalued, to say 6 yuan to one dollar, they get 6 yuan for one dollar but when they have to buy from the yanks, they spend less. This logic however only works for a very productivity economy as China's. They practically don't have to import but instead export.

In Nigeria terms, imagine we have to export so much crude and don't have to import much. We will buy making more money while spending less. China can afford it, Nigeria can't.

Oga devaluation is a tool to stimulate the economy and bolster exports, whenever China devalue they do so to be competitive as they are mainly manufacturing driven economy. Nigeria did the same in 1973, when we first devalued the Naira by 10% against the US dollar following Biafra war.

Op inflation fall on u

bullabong:
Clearly you are uneducated and ignorant .

Uncle educate him na.. Instead of being sarcastic. Smh

Pinkfriday:
If d CBN shud print dat amount of money in d naira equivalent, it will lead to inflation. Lets say d CBN prints d money give it to the FG, d govt in turn use it for project nd other things(government spending). We need to understand dat money moves in a circular flow, and government spending is a form of injection into d economy, simply put, govt spending pumps money into d economy. Now, excessive government spending cud lead to inflation whereby derz too much money in circulation, persistent increase in prices and too much money purchasing too few goods. The value of naira will fall in d domestic economy and dis can lead to total collapse of d domestic economy if inflation is not remedied. So,it better to avoid inflation or keep at a reasonable level...

Another nice and clear explanation... . Thumbs up poster.

What manner of criminal thread is this? See how crooked some ppl think o. Print dollars? Is dollar your currency? Based on what economic theory? This is why your typical Blackman sense has kept you in the dark. Instead of suggesting massive production of exportable products ,technology transfer and services to earn foreign exchange from international trade,you sketch this nauseating bullshit. Look my friend you better delete this thread,this is bad publicity for this nation in international community,before they start RUMOURS that the country is doing such.

Truckpusher:
Print the goddamn thing and before the West will wake up and suspect anything you've already used it in buying shares, gold, companies from their economy while bringing in policies that will lure their investors down here with the promise of cheap labor and wait till everywhere is calm.

Haven't you heard about currency manipulation by China that America keeps crying about while they are the chief currency manipulators.

This is the most short-sighted comment I have ever read.
It pays to read before speculating.

Just because an individual can pull off a fraud doesn't mean
a country can.

Pinkfriday:
If d CBN shud print dat amount of money in d naira equivalent, it will lead to inflation. Lets say d CBN prints d money give it to the FG, d govt in turn use it for project nd other things(government spending). We need to understand dat money moves in a circular flow, and government spending is a form of injection into d economy, simply put, govt spending pumps money into d economy. Now, excessive government spending cud lead to inflation whereby derz too much money in circulation, persistent increase in prices and too much money purchasing too few goods. The value of naira will fall in d domestic economy and dis can lead to total collapse of d domestic economy if inflation is not remedied. So,it better to avoid inflation or keep at a reasonable level...

If CBN should print this money n settle the national debt or probably servicing the national debt will it still affect the economy? note: newly printed note not in circulation

JAkpayen:
@OP,

Look at it from this angle: If every Nigerian is given access to print his/her money to use for buying or paying debt, what do you think will happen to the economy?

There is no reason why it is not technically possible but the naira will become junk and a piece of tissue paper will be more valuable than that.

Basically, the naira is only valuable if it's scarce, because we use it to procure scarce resources.

Someone was paying attention in Economics class

Ebookmathswaec:
Why can't we print the $5.5bn ourselves instead of borrowing since we can print money ourselves?

I believe if we print the money ourselves, we can use it for whatever we want and we won't need to pay back money to anybody.

Nairalanders pls! I need explanation.

Ha ha ha . . . We can't becos it will lead to to more money in the system against fixed amount of goods services and that will translate to inflation.

abescom:
[b]It won't make sense to you. Because you don't have any economical sense.

[/b]An export based economy can devalue their currency rather than print more money and still be better off. An example is China devaluating the yuan as they then make more money since they rarely have to import.

While Nigeria devaluing their currency can only lead lead cries since they have to import in foreign currencies.

And they don't also import raw materials for the huge export they make around the world ? really !! Your high economical sense(wrong context ) must be that of the aliens from planet Nibiru.

ivolt:



This is the most short-sighted comment I have ever read.
It pays to read before speculating.

Just because an individual can pull off a fraud doesn't mean
a country can.

And you've failed to see the sarcastic nature of that comment. You need a brain reset asap.

Brugo:
What a question!

Okay, even if I would answer you. You want to turn us to zimbabwe? You will flood the economy with cash. Inflation will ravage our economy and our money will become worthless. Besides, have you thought about the cost of printing the naira equivalent?

Anyway, I want to believe you're just pulling our legs.

...and our money will become worthless! As if our money was worthful before. What is inflation self? Why are we running away from our shadow? A measure of Garri which used to sell for between 250 and 400 now sells for 1200 and we are running away from an imaginary inflation! Voodoo Economists!

Ensquare:
If CBN should print this money n settle the national debt or probably servicing the national debt will it still affect the economy? note: newly printed note not in circulation

look at d topic, op is asking why d govt cant print d money instead of borrowing from foreign bodies... and I gave my little opinion...

Ebookmathswaec:


And borrowing the same huge amount won't do same?

but borrowing it in oyinbo man's currency won't cause economic downturn abi. oyinbo man raping us & our economy since 1914

This is a good question. To answer it, lets start with two short definitions:

1. Inflation: Too much money chasing after too few goods

2. Money: A store of value and a medium of exchange


From these two definitions we can proceed to an answer to the question.

The money in circulation is a store and reflection of the value in an economy. A rich country has more value stored, a poor country has less. Think of it this way: suppose a bricklayer works for a day and gets paid N4,000. He has made a wall or fence or whatever and created value in the economy. He will be rewarded with N4,000 in his account. An oil rig engineer might get N30,000 per day because he has created value for his company and society worth more than N30,000 by his actions to operate a rig. His bank account will reflect that. The one that produces more value should be richer hence oil rig engineers are richer than bricklayers. This also explains why America is richer than Japan and Mexico is richer than Nigeria; the first country in each listed pair produces more goods and services than the second.

If a country prints money, there is no value to back that money. It has not done any work. It has not created any goods or services to warrant having that much money. That country is lying to the world about its value.That country is like a senator overpaid for making noise in the house or like Evans the kidnapper. 'Money miss road'

The local economy and the international community will react to this sudden and unaccountable wealth. Vendors will take your money, sure, but they will charge more for their services because they can. Some people will wonder: 'how much more does this guy really have ? How much of it is genuine ? how do I get more from him ?' Thus both the printed funds and the genuine funds previously legitimately earned will go down in value since the former casts doubt on the latter and it is a natural law that things that are abundant lose value. This is the phenomenon of inflation and has happened most recently in Zimbabwe.
But note that while the money is going down in value because it is in excess and its origin is dubious, the prices of goods and services will continue to rise. (Remember the example of our overpaid senators ? They will use the excess 'awoof' money to pay for houses, cars and flights for themselves and their concubines. They have 'free' money and can afford to pay rent of 5.5 million in Asokoro and you and I cannot, so we will be pushed out of decent accomodation. Again inflation in action.)

Same thing can happen to Nations. Government flooding the economy with money for consumption will lead to inflation. This has been the case in Nigeria for almost all our modern history due to incompetent leaders.

Lastly, if you print local currency, the international community will take note of your country's actions and either refuse to accept your money since it has lost value, or force you to pay in dollars or other foreign currency which you will not have. If at that stage, you decide on currency forgery of US dollars, pounds sterling or whatever, that exposes you to sanctions and other bad things. This is the position faced by North Korea.

No country with a sane government in charge wants to be in the position of Zimbabwe or North Korea. If you cannot produce to create value, and you cannot go on a printing spree, then you must borrow. Borrowing has its own challenges that will require another article to explain, mainly because the lenders terms are not the same for poor and rich nations, but it might be the only choice.

In summary, money is a convention that is used to reflect value. It must be backed by production or else it becomes worthless.
There is more to it than that as economists will point out, but this is a simple explanation a layman can understand.

_{Disclaimer: I am not an economist.}

TimeMod3:
Lol. funny dude.
Send me your CV, we might need you as our new CBN governor . Lol

Nigerians would become persona no grata all over the world in just six months.

malton:


Because printing such a huge naira amount would result in inflation.

but borrowing it in oyinbo man's currency won't cause economic downturn abi. oyinbo man raping us & our economy since 1914
(

op u need to start school and leave nairaland,from junior class u will lean in economics that excess money in circulation causes inflation

Ebookmathswaec:

And borrowing the same huge amount won't do same?

Nay. I guess it ll only inflate the purse of some selected ''faithfuls''.

Ebookmathswaec:
Why can't we print the $5.5bn ourselves instead of borrowing since we can print money ourselves?

I believe if we print the money ourselves, we can use it for whatever we want and we won't need to pay back money to anybody.

Nairalanders pls! I need explanation.

We need money to print this money. So, how do we even get the money to use for the printing, if this as simple as you think?