Hi,
I'm really sorry if i sound like an illiterate or childish but I just want you people (especially economists) to explain the whole situation to me.

The level and extent at which poverty and the rate of development in our country Nigeria is going really gets me worried prompting me to write this.
What is poverty? Lack of money for use.

Now my question is why are we lacking money?
For crying out loud, money is man-made, manufactured by us HUMANS.
That's why we've got the mint where they are printed.
It's not dropping from above, it's not manna, it doesn't have anything to do with season, climate or weather.
So why can't money be printed for human use? why? after all we're the ones manufacturing it just the way we manufacture cars, build several houses and other man made products which are never scarce.

Why can't our government (and other countries as well)print sufficient money (instead of waiting for aides from countries like USA or UK to support our oil revenue) into circulation for the masses, pay the minimum wage, inject more money into the states so that they can also do this, pay up indebted workers, build better roads, solve electricity problems, build world class hospitals, schools, bridges, infrastructures in general making our country a better place to live in since all these projects require money?
This will stop people from running away from their countries in search of greener pasture.
If care is not taken we won't be able to achieve the vision 2020.
Fine we have corrupt leaders, what about the leaders that are genuinely there in the interest of the masses?
where will they get money to execute their projects.

I am very sure Abacha, Babangida and co printed enough money stashed up somewhere for their use such that their generations to come will never smell poverty. Imagine one of their wives saying that the poorest in their family is richer than aliko dangote. our own aliko dangote that we so respect and admire?? I don't believe all that money was gotten from oil alone.

Their is nothing stopping Nigeria from paying we the citizens or a particular age bracket e.g the old some money at least for their sustainance.

What is then the work of the mint and central bank? to be liquidating banks, introducing Islamic banking and laying down some silly policies when the level of poverty keeps increasing? Who then are they doing that for? in a society where the rich is continuously getting richer and the poor, poorer? The rich i guess.
It just seems like the money is hanging somewhere and not circulating.
Their main work should be reducing inflation and poverty, the poor man doesn't need all those bull shit neither does he understand them.
His main concern is putting food on his table and that should be their concern too, yes! that's why they are there.

Imagine a whole graduate earning 20k, what's that for?
When then will he earn all the money that his parents have invested on him?
in the next 20 years? sometimes this schooling of a thing discourages me.

I'm going through trying times right now, it's very frustrating and i know it's not only me.
It hurts when you badly need something and it can never be yours just because you don't have money(paper, can you imagine) and you may never get that thing.
Some people are even driving their 5 years salary. Why?

I have heard some explanation about this money printing issue but i'm still not satisfied.
That's why i'm throwing this question here

[b]
WHY CAN'T MONEY BE SUFFICIENTLY PRINTED FOR OUR USE?[/b]

Your comments and views will be highly appreciated.
Thank you

I admire you for coming out to ask this question.  It shows a mind that's not ashamed to learn.

Money itself is intrinsically useless.  Unlike beans, you can't eat it.  Unlike cement, you can't use it to build a house.  The only thing you can do with it is use it to buy or pay something with actual value.  Like food, or your house rent.  The only reason why money is valuable is because people are willing to accept it as payment.

One of the reasons why people are willing to accept money as payment is its scarcity.  Remember the adage that says, money doesn't grow on trees?  It's by design.  Because money is scarce, people are willing to part with valuable things in exchange for it.  They are willing to work long hours for it, producing goods and services that are useful to others.  If money is not scarce; if we can all sit at home doing nothing and still get money, then why should anyone go to work?  And if people don't go to work, then there will be nothing for you to buy with the money.  If farmers don't work, where will you get food?

Since money is backed by what you can buy with it, it follows that, if the government starts printing money for everyone, that money will become less valuable. It won't be able to buy much in the market.  This is called inflation. 

Government workers will demand higher wages, because their salaries are no longer adequate, and the government will have to print more money in order to pay them.  This goes on and on until money becomes completely worthless.  And it's known as hyper-inflation.

Summary: The government can't print sufficient money for everyone because it will lead to hyper-inflation.

Thank you so much for your reply, I really appreciate it.
So what is the government now doing to bridge the gap between the rich and the poor?

.

Seun:

I admire you for coming out to ask this question.  It shows a mind that's not ashamed to learn.

Money itself is intrinsically useless.  Unlike beans, you can't eat it.  Unlike cement, you can't use it to build a house.  The only thing you can do with it is use it to buy or pay something with actual value.  Like food, or your house rent.  The only reason why money is valuable is because people are willing to accept it as payment.

One of the reasons why people are willing to accept money as payment is its scarcity.  Remember the adage that says, money doesn't grow on trees?  It's by design.  Because money is scarce, people are willing to part with valuable things in exchange for it.  They are willing to work long hours for it, producing goods and services that are useful to others.  If money is not scarce; if we can all sit at home doing nothing and still get money, then why should anyone go to work?  And if people don't go to work, then there will be nothing for you to buy with the money.  If farmers don't work, where will you get food?

Since money is backed by what you can buy with it, it follows that, if the government starts printing money for everyone, that money will become less valuable. It won't be able to buy much in the market.  This is called inflation. 

Government workers will demand higher wages, because their salaries are no longer adequate, and the government will have to print more money in order to pay them.  This goes on and on until money becomes completely worthless.  And it's known as hyper-inflation.

Summary: The government can't print sufficient money for everyone because it will lead to hyper-inflation.

To the poster Thumb up to you

@Seun

In as much as i understand you herei can say then you are right to some extent

Government Can`t afford to make Money worthless

Government can`t print more money to pay salaries so on,

Lets take what is going on in Dubai into consideration

I know most of the development going on there are sponsored by the Government

Most royal families in the arab world uses government but in a good and sensible way

Lets take Qater for another example

They are currently building what is known to be World Biggest Airport and also Qater airway is owned by the Government
Qater airway transport passengers to Over 100 destinations in the world. which makes it the highest in the world

Can you imagin how many number of people transit in this country DOHA everyday, people do shopping and also government get their taxes also.

Is that not a good investment by the government?

My Question

Why can`t our government invest to attract the world?
Why do our government put all area of development into the private sector hand?

Why our government is failing us?

Don`t forget after the Earthquake and Tsunami in Japan

The Japanese government cough out 40billion yen to develop the affected area

and in less than a month most places that were devastated became solid and better than the roads Julius Berger are constructing here in Lagos.

Why didn`t the Japanese Government started looking up to USA and Britain before they could repair what was damaged.

The truth is, The government is investing in their environment

If it were in Nigeria i am definitely sure our government would be looking for a way to partner a private company to before it could be repaired.

For example LAGOS -IBADAN EXPRESS WAY
It was award and partnered with bi-Courtney ltd owned by BABALAKIN

Why government can`t just take responsibility for Government properties.

In as much as government are looking up to Dangote and Adenuga to boost our economy then trust me guys Nigeria will remain stagnant.

Ordinary PHCN was privatised

ever since then can anyone come out and say something good they have done that is different from NEPA

Local Airport in Lagos is privately owned

Nitel is into confussion

Refineries are in the hand of Foreigners, if any

What is Government doing self?

No Security
No Water
No Good roads
No Electricity

MY QUESTION?

WHY CAN`T GOVERNMENT PRINT MORE MONEY FOR HER OWN DEVELOPMENT?

Abi o dt's what i'm saying, if they cn't print money directly for our use, they shld @ least print to develop our dear country so as nt to make living more unbearable than what it is. Nigeria will not develop at this rate we'r going o.

PLS I NEED SOMEONE TO XPLAIN WHY MONEY CN'T BE PRINTED FOR DEVELOPMENT.
Abi is the cost of printing notes too xpensive for the FGN to handle? Na wa for this our country o.

Until we have great people that can look into the future with their brain then we might be dancing on a spot.

So far ,so good our lawmakers are just looking into the future with the amount of money in their bank account.

great country greedy power holders

Stop disturbing your self Nothing will change in that country until the right thing is done, i think that is how God want the country to be so don't blame the Govt . all i know is IF God want to change the life and everything in Nigeria he knows the right thing to do and the change will come let us leave everything in the hands of God .

God can use the govt to brake our heart, to open another door for US. God can cause an earthquake in a country for others to be well God can cause a bad situation for other things to be re arrange so give thanks to God in all things cos the good and the bad both come from God

@ poster, i dey feel u jare

Abi now.
The thing don tire me sef

Tanks 4 dis post and tanks 4 gud reply, we dont want goverment to print money and be share it 4 us, bt let dem print money and use it to construct gud road throughout federation,electricity, water.security, a confusing tourism centre, good houses in every local goverment dat pple wil be paying gradualy.looking at all nigeria stadium, nigeria airway, we dont mind if they increase taxe wit all dis nigeria wil pay, anyaw god bless american and give them snow.god bless nigeria and give us bad leaders.

Just as an individual can never become rich by trading with nobody so can a country can never become rich by avoiding trades with other countries.Money is not paper but an exchange for goods or services.Trade by bater was an early form of monetary exchange(I give u what I have in exchange for what u have under an agreement) and that has evolved into what we have today where printed currency is being used as a "middle man".
Take the case of Zimbabwe when most  countries avoided trading with her.At a point a loaf of bread was going for 100,000 Zimbabwean dollars.Mugabe was only printing money and that isn't sustainable.Dubai at any point in time didn't print money but used their God given resource to develop their country.
Nigeria has nothin to offer the world in terms of products and services apart from oil which is chronically mismanaged.We have no infrastructure to promote production of goods which can be exported in exchange for money.Don't be surprised that countries that have little resources are doing better than us because of proper management.
China is an example of a country that has grown rich due to massive export of products over the past few years.
Once corruption is reduced and infrastructures put in place,the country will experience a rapid transformation.Printing money is not an option because it is not sustainable.

And why can`t this topic make the front page?

We need more contributions,

I wonder why Jim Iyke buying 100 pairs of shoes made it to the front page.

The same disease running through the elite politicians is running through the rulers here

OYINBOGOJU:

I wonder why Jim Iyke buying 100 pairs of shoes made it to the front page.

The same disease running through the elite politicians is running through the rulers here

We are duty-bound to give people what they want. A lot of people must have been interested in Jim Iyke's shoes.

Seun:

We are duty-bound to give people what they want. A lot of people must have been interested in Jim Iyke's shoes.

You might be right in your own world

But tell me a lot of people are not interested in knowing their Government inefficiencies?

Another great ideas are being trampled upon

OYINBOGOJU:

And why can`t this topic make the front page?

We need more contributions,

my thoughts exactly,
we truly need to view people's contributions about this.
Seun abeg move to front page.

OYINBOGOJU:

And why can`t this topic make the front page?

We need more contributions,

my thoughts exactly,
we truly need to view people's contributions about this.
Seun abeg move to front page.

OYINBOGOJU:

And why can`t this topic make the front page?

We need more contributions,

my thoughts exactly,
we truly need to view people's contributions about this.
Seun abeg move to front page.

Good question and well structured answers.However there is more the the intrinsic value of money mentioned in the reply,there is also the derived value of money(original value) which was debased when America decided to move abandon the gold bullion system for obvious reason!

As a result of this, the currency of any country is not determined by its intrinsic value alone but also by its derived value. The derived value of money stems from the value of the underlying variables associated with it. Here I will refer to Seun's post on why Government cannot print money with reckless abandon. One of the major reasons why our currency has no real derived value is because we are basically an export oriented economy. Everything we use is tied to the derived value of goods and services produced in another country and sold in ours.

If we are able to develop the real sector and revamp the the manufacturing then, perhaps the 20k you are complaining about will be a neat sum.
God bless Nigeria !

There is something I still don't understand:

So if the government prints more money for example. If Mr. A is a farmer, what changes economically for Mr. A so that he raises the price of his yams and then one naira cannot buy the same amount of yams again? How does that work? What does he feel in his pocket and how does he feel it that he knows to raise prices? Will love an answer to this.

@ Adeibi, lol. For a long while I also wondered why some countries were rich and some poor. I wondered why governments couldn't just print as much money as possible to bridge the gap! But then. . . .

Seun has done a good job in breaking it down with ingenius simplicity and clarity. It is clear enough. But then a few grey areas remain. . .

One angle that I have not yet figured out is the extent to which printing excess money (in itself) can actually cause hyper-inflation if such excess cash is not directly released into the economy (though increased salaries, cash handouts to citizens, etc,). This is especially so in the increasingly integrated global economy that characterizes the new world order. For instance, if government simply prints excess cash and strictly uses such cash to fund key infrastructure projects such as massive road construction and power supply (especially with imported materials, labout and foreign contractors that would repatriate the project funds to their home countries), then to what extent can such printing of excess money result in inflation in the local economy - since such cash was not directly injected into the economy? ? ? I hope someone understands what I'm trying to say. I would really appreciate explanations for this:

Why can't government simply print 10 trillion naira in cash to, for instance, build a national rail system and reconstruct the entire power infrastructure using foreign contractors? Since such cash would not be directly injected into the economy, would it also cause hyper-inflation? How? I apologize for my ignorance in advance.

Best thread ever.

Lesson of the day: Why work, when the govt can print ?


Lazy girl OP. I see high-way robbery in your future, if you continue to think like this.

Why Can't Money Be Sufficiently Printed For Our Use?

The simple answer is this: If you do that, sooner or later, you will need a wheel barrow filled with bundles of money just to buy a loaf of bread. If you think that is an exaggeration, it actually happened in Germany in the 1920s.

Recent examples include Zimbabwe and Iraq. In the case of Iraq of a few years ago, bank notes were not counted but rather bundled and weighed on a scale. As Seun said, it is called hyper-inflation.

@proO1
Think about it. Whatever the Govt does with the money, the net result is "it will be injected into the economy". I will let the economists give you a better aand full explanation.
However, look below for what happened when Mugabe kept printing money and removing zeroes. Just read the exerpts below. The result was not infaltion. It was hyper-inflation (and that is putting it mildly)

"In 1980 when Zimbabwe became independent, the Zimbabwe dollar became the common currency. The currency originally had 6 denominations in paper notes and 8 denominations in coinage. The paper notes were Z$500, 100, 50, 20, 5 and 2. The coins were Z$5, 2, 1, 50, 20, 10, 5, and 1 cents. As the inflation rose, larger bills were needed to pay for menial amounts. The bills that ultimately were printed ranged from the original denominations up to Z$100billion. The Central Bank of Zimbabwe planned to print and circulate denominations of up to Z$10, 20, 50, and 100 trillion.[34] The Central Bank would no sooner print and distribute one denomination of its currency and within days there would be a new announcement of a higher denomination being printed. The announcement for the Z$200,000,000 bill came just days after the printing of the Z$100,000,000 bill.
As inflation rose, the government continued to print larger and larger bills. They did not attempt to combat the inflation with other fiscal and monetary policy. In 2006 before the hyperinflation reached its peak, the bank had already announced that it would be printing larger bills to buy foreign currencies. This led the Reserve Bank to print a Z$21trillion bill to pay off debts owed to the IMF.
In an attempt to revalue and combat inflation, the Central Bank of Zimbabwe undertook three efforts to change the denomination of the currency. The first effort was undertaken in August 2006. The Central Bank asked citizens to turn in notes and exchange for new notes with three zeros slashed from the currency. This was in attempt to slow the inflation.[35] The bank attempted this policy again in July 2008. The governor of the Reserve Bank of Zimbabwe, Gideon Gono announced that a new Zimbabwean dollar would be printed, but this time 10 zeros would be slashed. This would mean that the Z$10 billion would be redemoninated to be Z$1.[36] The 10 zeros were not only cut to try to slow inflation, but also to make the currency more manageable for the people who were using it.[37]
A third redenomination, producing the "fourth zimbabwe dollar" occurred in February of 2009, and dropped 12 more zeros from the currency. It was thus worth 10 trillion trillion ZWD (first dollar), so overall the ratio of the redenominations was 10^3 * 10^10 * 10^12 = 10^25"

adeibi:

Abi o dt's what i'm saying, if they cn't print money directly for our use, they shld @ least print to develop our dear country so as nt to make living more unbearable than what it is. Nigeria will not develop at this rate we'r going o.

PLS I NEED SOMEONE TO XPLAIN WHY MONEY CN'T BE PRINTED FOR DEVELOPMENT.
Abi is the cost of printing notes too xpensive for the FGN to handle? Na wa for this our country o.

Ok let me answer your question and I hope I' able to put it across very well. First of, I don't mean to teach Econ 101, so please forgive me. There are some questions that need understanding before you know why money can and cannot be printed. Questions like;

A. What is money (we know what that is already)

B .What are the components of money i, e.  what role does money play in the economic environment

C. What are the factors affecting the flow and stability of money.

D. What are the consequences of little or much money in the system

To answer your question in brief, money can be printed; however, there has to be a check and balance of inflation rate as well as price stability. Printing of money depends on how much money is in supply (every components included) and taking the nearest inflation rate into action. Although cases differ from countries to countries, although, the concept remains the concept is the same. Take for instance, if Nigeria has a money supply of $100 billion (all money components included), @ an inflation rate of 5% on every dollar, in other words, a dollar is actually worth less than $0.96 while the other $0.04 represents an increase in price most likely due to inflation. More so about $4 of money in supply is technically inflation money which isn't bad at 5% of the real cost.


The CBN can print money directly for that purpose but what happens is that that money finds its way back into the economy. Take for instance Nigeria's current inflation @ 12% and has $100billion in supply, if CBN should engage in printing money say an additional 5% to inflation to increase lending for infrastructure development, that means an additional $1billon was added into the system; that will push price up by 5% as well and inflation will rise by same amount. Well we can say everyone will bear the grunt of  5% rise in cost and standard of living. So example you purchase something for N100 and tomorrow it's N105, the extra N5on it is inflationary rate. Now inflation is at 17% but the CBN will use different mechanisms to shrink money circulation for instance increasing reserve of banking institutions (which tightens credit and withdrawal), selling OTC securities   ( cash received is removed from the economy, et al). What you have to understand is that the CBN has to be experienced in these dealings else they can spiral inflation particularly if it's not used for that purpose. Money can be printed for projects so long it's removed from he system gradually, that's fine; however, money CANNOT be printed sufficiently for everyone, that will drive super inflation in the economy which you and I surely don't want.


@Proos 1


If govt prints 10trillion naira, that money SURELY will find it's way back into the system. You said building rail for instance, won't you hire workers to work on the rail, how about the inventory to be used at the rail site? How about foreign exchange bought to be used hire experts and consulting firms? How about foreign inventory, imports and trade? All this one way or another will filter back through into the system. What the fed does is if it doesn't want money into the system, they use different mechanisms such as increasing the reserve requirements for banks, discount rates (fed system) and Open Market Operations where the feds sell securities such as Bonds and cash received is taken out of the system immediately. The third is a more faster and quicker approach to reducing and increasing money supply, interest rate and inflation as well.

beejaei:

There is something I still don't understand:

So if the government prints more money for example. If Mr. A is a farmer, what changes economically for Mr. A so that he raises the price of his yams and then one naira cannot buy the same amount of yams again? How does that work? What does he feel in his pocket and how does he feel it that he knows to raise prices? Will love an answer to this.

Mr A would know to increase his prices because his tubers of yam would become more "valuable" due to excess money in the system. He would need to do this, else run out of his yam because then everyone would have more than enough money to buy his yam.

Your rubbish government already prints out more than enough Naira as is, instead of distributing receipts from your oil exports in dollars, they hoard the dollar, and print the Naira equivalent. Which is one of the reason the banks would lend your business money with 20-30% interest (trying to reduce access to the Naira)- one of the reason most of our graduates turn to armed robbery due to businesses not hiring.

Worst part is they end mopping up this same Naira from the economy by buying it from banks with 10% interest. Economic mismanagement at its worst!!

beejaei:

There is something I still don't understand:

So if the government prints more money for example. If Mr. A is a farmer, what changes economically for Mr. A so that he raises the price of his yams and then one naira cannot buy the same amount of yams again? How does that work? What does he feel in his pocket and how does he feel it that he knows to raise prices? Will love an answer to this.

I believe the guy above me has answered your question


It's a simple theory of demand and supply. When you sell at $1 previously and you sold 10 yams at that amount, and now there extra 5% of money in circulation, that will push demand by 2points to the right because people have more buying power for those yams and supply shrinks to the left, so in other words, the suppliers will react to the price shifting and increase price, and then the consumer (demand) will pay more ($1.05) for the yams. Obviously when there's inflation and price increase, the suppliers know obviously because the comparison to the daily index will be off showing that prices are rising perhaps due to excess money in circulation.

there is nothing like printing enough money, the govt only has to allow the money to circulate properly and increase developmental strategies that will reduce the high cost of living and also use the money that we already ve to provide the basic amenities needed by the society which will foster rapid economic growth and at the same time create more job opportunities.

check out this thread https://www.nairaland.com/nigeria?topic=724540.msg8824207#msg8824207

antitpiah:

Lazy girl OP. I see high-way robbery in your future, if you continue to think like this.

LOL.
No worries dear.
I'll gladly have you as my first victim.
Mscheeew