read a post where edo state governor Godwin Obaseki said Fg printed 60 billion Naira for states to share due to due to insufficient funds.

https://www.nairaland.com/6500181/obaseki-fg-printed-60-billion

If this is the way the country is heading, I think it will be good for you to know the prons and cons of printing more money.


The problem with printing money

Accoirding to Tejvan Pettinger 28 November 2019.

Readers Comment. Why doesn’t the Bank of England just print the money instead of borrowing the money?

Printing more money doesn’t increase economic output –  it only increases the amount of cash circulating in the economy. If more money is printed, consumers are able to demand more goods, but if firms have still the same amount of goods, they will respond by putting up prices. In a simplified model, printing money will just cause inflation.


Problems of inflation

Why is inflation such a problem?

Fall in value of savings. If people have cash savings, then inflation will erode the value of your savings. £1 million marks in 1921 was a lot. But, due to inflation, two years later, your savings would have become worthless. High inflation can also reduce the incentive to save.

Menu costs. If inflation is very high, then it becomes harder to make transactions. Prices frequently change. Firms have to spend more on changing price lists. In the hyperinflation of Germany, prices rose so rapidly; people used to get paid twice a day. If you didn’t buy bread straight away, it would become too expensive, and this is destabilising for the economy.

Uncertainty and confusion. High inflation creates uncertainty. Periods of high inflation discourage firms from investing and can lead to lower economic growth.

Hyperinflation in Germany during the 1920s

Inflation was so bad in Germany that money became worthless. Here a child is using money as a toy. Money was used as wallpaper and to make kites. Towards the end of 1923, so much money was needed, people had to carry it about in wheelbarrows. You hear stories of people stealing the wheelbarrow, but leaving the money.

Printing more money is exactly what Weimar Germany did in 1922. To meet Allied reparations, they printed more money; this caused the hyperinflation of the 1920s. The hyperinflation led to the collapse of the economy.

Hyperinflation also occurred in Zimbabwe in the 2000s.


Src: https://www.economicshelp.org/blog/634/economics/the-problem-with-printing-money/

I will be boring you with long story. if you want to know more search Google on the disadvantage of printing more money

Printing money and the value of a currency

If a country prints money and creates inflation, then there will be a decline in the value of the currency.

Suppose inflation in Germany is 100%, and inflation in the UK is 0%.

This means German prices are doubling compared to the UK.

You will need twice as much Germany currency to buy the same quantity of goods.

The purchasing power of the German currency is declining, therefore the value of mark will fall on exchange rates.

People couldn’t afford basic goods. Zimbabwe had the worst of both worlds – prices rising faster than wages and incomes. People became “poverty billionaires’ It was no good having a salary of One billion dollars if a loaf of bread cost two billion.


Switch to a barter economy. With money becoming worthless, people found ways around the official economy, paying for goods in kind (e.g. using agricultural produce to get a haircut) The problem is the barter economy is only useful if you have goods to exchange. Business increasingly switched to the use of foreign currency – the US dollar as the only way to survive inflation. In 2009, this practice became more widespread.

Lost savings. Anyone with savings lost everything – unless they were able to exchange with foreign currency. Even people with assets and property often saw the value shrink. Foreign exchange controls make it very hard to take money out of the country.

Nigerians had better elect a president who will rescue the country from the inflationary mess Buhari is dragging them to in 2023. A word is enough for the wise!

This wasn't the change they promised us....

Wow and the plot thickens

Bye bye Nigeria. A new era of new born independent republics is about to emerge!

Governor Obaseki seems to understand how economics work. I have watched this man make sensitive contributions to economy status...

His sense of economics is just too brilliant. I am a graduate of economics and statistics so i probably know a little about this currency value stuff....

We will need this man in the next election. Someone that brilliant should contribute to the economy
..
Forget Tinubu, honestly he has nothing to offer, you and i know this... Let take this tribal thing out of the theatre, we need someone with brains not an old man with dementia and unable to find solutions to x-2=1.....

Now to the fact...the MANNNABBQGRILLS is a lady. By all indications, the zonB buhari fan is a woman, not a man... Except being gay, most of her writings show high feminism...

Buhari is a monumental failure. Years back, i would gladly say nothing affects me in this country since i make money from a source other than the govt.... But now, i begin to see everything clearly. Most especially the numbers of people calling for financial support..

Forget tribalism, let's forbid these old men that have nothing to offer in power.




#Myopinion