A305:
Not technically the best option to solve inflation and it would cause more inflation because there would be too much money in circulation chasing fewer goods. This tends to weaken the value of the currency till one loaf of bread could be sold for one million, a text book example of what happened in Zimbabwe some years back.

Zimbabwe kept printing more money to cushion inflation and kept introducing new currency face value until they had one million note face value. It ended in chaos, poverty and protest for a regime change.

So, what you should understand is money management is key factor to stimulating and running the country's economy, when you ruin that by printing more money, you tend to ruin the country itself.

What CBN does to tackle inflation is raise interest rates to discourage banks from lending out the money that creates new money in the system. As every loan in the system creates new money.

No wonder the naira us suddenly stabilizing against the dollar.

It's the new interest rates that did it.

Damn my Eyes!

womenareapezz:
print more money so that your currency will be like that of Zimbabwe own, whereby you will be buying bread at 1 million naira

Dey use sense sometimes dey think !
At least history for suppose don give you small sense na

E sure me say u no read the post or if u read and na wetin u fit come up with be this, then comprehension issa problem here.

And this E-Naira is like the government is printing more money

Printing more money is not the problem, the question is "the money will be use for what" if they're increase in demand unfortunately the price of commodity will also increase.

PNomsule:
I am really just curious as to "why can't we just print more money and solve the poverty problem in the country?"

Terms like "inflation" and the "devaluing of the naira" are the usual buzz answers to that question. Also, people give the example that if we were to print more money and just give everyone N5,000,000 for example, then everyone would go out and buy things, thus making "THINGS" more scarce and in short supply and hence driving up the prices of things (simple demand/supply economics). But herein lies the catch for me... With TRUE unemployment rate somewhere around 33% in the country, if DEMAND for "THINGS" rose, then I would think that companies would WANT to hire more people and build more processing plants to keep up with demand and raise their profits. So, the influx of cash (printed money) would seem to solve the unemployment problem.

Again, we have agencies that regulates pricing in the economy: PPPRA, Price Control Board (Ministry of Commerce) etc, with those, can't the likely over pricing of commodities (THINGS) be controlled and gazetted to avoid the story of "too much money chasing fewer goods"?

In the final analysis, a robust and health competitive economy would have been created and underemployment issues largely solved.

Economists and Analysts lets discuss?

Ordinary Agege Bread need IMPORTATION of flour to achieve We import everything. So, ask the govt. to print more dollars instead. The total number of naira in circulation must not exceed the total amount of dollars u have. Else u are spending more than u earning and wot more can bring u to penury?

PNomsule:


My problem is those responding and claiming financial experts are simply regurgitating textbook inflation analysis which I already envisaged in my post.

I saw that too,no out of the box thinking.
Just regurgitating things you already stated and claiming analyst.
Pathetic!

PNomsule
Let me put it as crudely as this

Lets say there are 1,000,000 tubers of yams and you have ₦100,000,000 chasing it, how much would a piece of yam go for? ₦100 each.

Now, if government printed more money and there is now ₦150,000,000 to purchase 1,000,000 yam tubers, how much will a tuber cost?

Simply printing more money leads to inflation.

PNomsule:
I am really just curious as to "why can't we just print more money and solve the poverty problem in the country?"

Terms like "inflation" and the "devaluing of the naira" are the usual buzz answers to that question. Also, people give the example that if we were to print more money and just give everyone N5,000,000 for example, then everyone would go out and buy things, thus making "THINGS" more scarce and in short supply and hence driving up the prices of things (simple demand/supply economics). But herein lies the catch for me... With TRUE unemployment rate somewhere around 33% in the country, if DEMAND for "THINGS" rose, then I would think that companies would WANT to hire more people and build more processing plants to keep up with demand and raise their profits. So, the influx of cash (printed money) would seem to solve the unemployment problem.

Again, we have agencies that regulates pricing in the economy: PPPRA, Price Control Board (Ministry of Commerce) etc, with those, can't the likely over pricing of commodities (THINGS) be controlled and gazetted to avoid the story of "too much money chasing fewer goods"?

In the final analysis, a robust and health competitive economy would have been created and underemployment issues largely solved.

Economists and Analysts lets discuss?

Money is backed up by value.

If you print paper money but you have no value behind it to support it, all you've got is a worthless piece of coloured paper.

Value include valuable things that can be used for exchanges like gold, oil, intellectual properties, land, agricultural products, mineral reserves, military power, technology etc.

If you don't have anything of such nature to back up your economy, you are nothing but a poor country.

If you like print as many notes as Zimbabwe did, you are still not going to improve your economy one bit.

And that's because money is value and not actually the paper you have in your hands.

No value; no pay.

In summary, economic problems cannot be solved by printing more papers.

Jt can only be solved by increasing your value.

You can go and verify this.

PNomsule:
I am really just curious as to "why can't we just print more money and solve the poverty problem in the country?"

Terms like "inflation" and the "devaluing of the naira" are the usual buzz answers to that question. Also, people give the example that if we were to print more money and just give everyone N5,000,000 for example, then everyone would go out and buy things, thus making "THINGS" more scarce and in short supply and hence driving up the prices of things (simple demand/supply economics). But herein lies the catch for me... With TRUE unemployment rate somewhere around 33% in the country, if DEMAND for "THINGS" rose, then I would think that companies would WANT to hire more people and build more processing plants to keep up with demand and raise their profits. So, the influx of cash (printed money) would seem to solve the unemployment problem.

Again, we have agencies that regulates pricing in the economy: PPPRA, Price Control Board (Ministry of Commerce) etc, with those, can't the likely over pricing of commodities (THINGS) be controlled and gazetted to avoid the story of "too much money chasing fewer goods"?

In the final analysis, a robust and health competitive economy would have been created and underemployment issues largely solved.

Economists and Analysts lets discuss?

Printing more money will not solve the problem. In fact, prices will continue to increase. Let's analyse the cause of Nigeria's inflation. I know sure two things contributed to this..
1) We are too import dependent, we import literally everything. Some days ago, I saw a term on Twitter and I decided to read more about this - Import substitution industrialisation (ISI). ISI is generally stopping the importation of the products we can produce, produce in-house, sustain ourselves and export. To a very large extent, this is the policy Buhari Govt has adopted.
Under ISI, the country looks to more exportation cheaper and importation more expensive. For example, you will see that the Govt shut down the land borders, the devalue the Naira. When you devalue a currency, it is weakened compared to other currencies, someone in the USA may be able to buy a product in Nigeria at a cheap price because Naira is weak. Devaluing the Naira makes us more competitive globally. With this, we can start exporting our product.
Going back to my point, with the Govt frustrating all efforts buy foreign goods, devaluing the Naira in an attempt to stop importation, importing any product is now very expensive because of the weakened Naira. Since we don't produce many of the things we consume in-house.

I totally agree with op
Theoretically economic is not for underdeveloped nation but developed one.

waice6571:


This is against everything common sense stands for! Money is only useful when you create value for it.
Zimbabwe experimented this option some years back and their currency became a joke without economic value.
They have single note of 1million Zimbabwean dollar that is not enough to buy a wheelbarrow.

Did they make attempt at price control and regulation early in the day?

I guess you missed the point. That’ll mean heading for inflation. We just need to produce more. Printing more worthless currencies would do no good. Paper does not guarantee food on the table, production does.

jumper524:
Bros in a financial analyst and I've always maintained this perspective.
Many financial policy are not real, they are all artificial and several factors make them happen.
Printing more money knowingly leads to artificial inflation but secretly still maintains the economic situation.

Financial analyst my ass..... financial policies are to make things work.

PNomsule:


I think you're easy to relate with, you argue with sound perspective and broad knowledge base, I must acknowledge that.

Back to our discuss and importantly, a situation where Govt have to print more money and share is an aspect of a mixed economic system that combines aspects of both capitalism and socialism. What a mixed economic system does is it protects private property and allows a level of economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims. Hence I maintain that prices could be controlled.

(you will agree with me that in contrived circumstances, gravity can be felt less e.g Astronauts space travel.)

Again, if more people are employed, it means supply will increase relative to demand and the aspect of "too much money chasing fewer goods" diminished. Don't you think bruv?

I love how you stated your views.

However, i think you have only considered the demand side and how it can necessitate increase in supply. There are other factors that determines the level of supply which have not been considered. Labour can truly help in increasing supply but that isn't achievable without capital (raw materials, machines etc).
Remember that the general price level is on the increase, so labour will demand for higher wages, cost of capital increases(especially imported items). All these would raise the cost of production which strengthens inflation through higher prices.
And the cycle continues......

I hope this helps.
Thanks for reading.

P.S. Excess government interference (esp max price control policy) will most likely discourage the producers because they are feeling the heat of rising cost and at the same time desire to make maximum profit. They may be forced to shut down and this will translate into lower supply, further strenthening inflation.

PNomsule:


It appears the responders I'm getting on this issue are plain textbook analysis and not even addressing the issues from the points I posited, especially that the fears you raised, my post envisaged it already?

Can prices be controlled, if not what then is the usefulness of the Pricing Regulatory & Control bodies we have in the country?

What happens to the urgency of Capitalists to get more people employed as to meet rising demands associated naturally from too much money chasing fewer goods?

Prices cannot be controlled
And at the same time you are increasing liquidity

That's how you Bleep up an economy

jumper524:
Bros in a financial analyst and I've always maintained this perspective.
Many financial policy are not real, they are all artificial and several factors make them happen.
Printing more money knowingly leads to artificial inflation but secretly still maintains the economic situation.

You can not print money above your asset

RZArecta:
you're not a financial analyst oga, stop lying and even if you insist you are then you're obviously very terrible at your job and I'll advise every sane person to run away from you

you don't just accuse him without providing a better solution or explanation to the topic.
that is absurd

Freelane33:
Nigeria has spoilt beyond repair
It can never be better again
The best thing is for everyone of us to find our square roots
And if there is no means to japa
We should continue living and resign to faith

One simple question: Where/What exactly is our square root?

Melonny:

Printing more money will not solve the problem. In fact, prices will continue to increase. Let's analyse the cause of Nigeria's inflation. I know sure two things contributed to this..
1) We are too import dependent, we import literally everything. Some days ago, I saw a term on Twitter and I decided to read more about this - Import substitution industrialisation (ISI). ISI is generally stopping the importation of the products we can produce, produce in-house, sustain ourselves and export. To a very large extent, this is the policy Buhari Govt has adopted.
Under ISI, the country looks to more exportation cheaper and importation more expensive. For example, you will see that the Govt shut down the land borders, the devalue the Naira. When you devalue a currency, it is weakened compared to other currencies, someone in the USA may be able to buy a product in Nigeria at a cheap price because Naira is weak. Devaluing the Naira makes us more competitive globally. With this, we can start exporting our product.
Going back to my point, with the Govt frustrating all efforts buy foreign goods, devaluing the Naira in an attempt to stop importation, importing any product is now very expensive because of the weakened Naira. Since we don't produce many of the things we consume in-house.

Largely our Govt is irresponsible, a case in point is the non patronage of our own cars: Innoson, Dangote Peugeot. China took this ISI approach and they are better for it today.

naijapips04:


So what was Peter Obis suggestion?

production

emerged01:

Bros,we are all here to learn,he can also learn from you. Attacking is childish and uncalled for. Simply,response to him with your view on the topic.

It just baffles me the way the average Nigerian thinks as evidenced by the way folks relate, react and postulate ideas on Nairaland.

Someone sat down, exercised his intellectual capacity to think about the various economic issues bedeviling the country and was wondering why a particular theory he believes could work wasn't adopted. Now that man is a THINKER, A SOLUTION PROVIDER.

Considering the fact he understands he may not know all the aspects, twists and turns and implication of his solution, he has come here to Nairaland (a forum fast losing its relevance due to the preponderance of folks like you quoted) to sound out his opinion and hear what other "intellectuals" and "subject experts" he believes resides in the building have to say.

Rather than comment ON the topic intellectually or keep mum if they have nothing to say and LEARN, these children of perdition will always seek to attack the poster, question his sanity, insult his person, his gender, ethnicity,beliefs etc and TOTALLY ignore what the poster was about.

These are the people you say should lead the country, these are your so-called youth who want to wrest power from the current thrives we have as politicians. Let's pray we don't substitute a GREATER evil for a lesser one when folks exemplified by the one you quoted come to positions of power and authority. If Nairaland is to be the measure of how prepared the Nigerian youth is for power and responsibility, then the country is DOOMED!!!

Thanks for your feedback to he/she that posted thinking they know something whereas s/he wallows in repugnant ignorance.

VlamesIffect:


Financial analyst my ass..... financial policies are to make things work.

funny enough many people think playing by the rules is what strives the economy. Top European countries don't play by the book.

Mrsoft3:



You can not print money above your asset

This is interesting, can you shed more light?

jumper524:
funny enough many people think playing by the rules is what strives the economy. Top European countries don't play by the book.

You know the vibes

A305:
In this life; there are some forces you can't control.

Think of: The force of gravity, The speed of light, The doppler effect of soundwave so also, The forces of demand and supply in economics.

Price control mechanism will only work in a socialism or communism economy NOT a capitalist economy where everything is geared towards profit making.

It can also work when a cartel of buyers tends to make it work — this is a scenario whereby the G7 are recently talking about putting price cap on Russia oil but sadly it will never work because Russia will decide not to sell to them and instead move their market to Asia and East Asia.


Why?

The forces of demand and supply can hardly be influenced.

Aside from demand & supply, there's international trade (import & export), cost & factors of production, over dependence on oil sector.... many other internal & external economic issues that just makes printing more currency sound ridiculous. Thank God dey didn't even introduce the 10,000 naira single note as dey wanted to back in the day...

PNomsule:


So my question remains valid, can we print more money and engage same in "viable agricultural crop & meat production" as to employ more able bodied men & women as to fight unemployment and by extension, poverty?

The answer is no, because the cost of printing money is higher than it value. For example you could need like 7million naira to print 5million Naira. So we should use available resources to produce agricultural products for exports to earn foreign currency which will boost the economy and strengthened the Naira. The empty brains who makes up the 'presidency cabal do not have any slight idea of this. We can produce rice to feed the entire west Africa. Imagine China produces Rice in excess.

PNomsule:
Also, people give the example that if we were to print more money and just give everyone N5,000,000 for example, then everyone would go out and buy things, thus making "THINGS" more scarce and in short supply and hence driving up the prices of things (simple demand/supply economics).

LOL, ignorance at its peak.

Give everyone 5m naira and see what you currently buy for 10k turn 1m naira, until you have a truck loaded with money and people will rather steal your shoes.

Money is just paper, it has no real value, it's an illusion, just a means of exchange. The value of money lies within what you can buy with it.

PNomsule:


I think you're easy to relate with, you argue with sound perspective and broad knowledge base, I must acknowledge that.

Back to our discuss and importantly, a situation where Govt have to print more money and share is an aspect of a mixed economic system that combines aspects of both capitalism and socialism. What a mixed economic system does is it protects private property and allows a level of economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims. Hence I maintain that prices could be controlled.

(you will agree with me that in contrived circumstances, gravity can be felt less e.g Astronauts space travel.)

Again, if more people are employed, it means supply will increase relative to demand and the aspect of "too much money chasing fewer goods" diminished. Don't you think bruv?

Nobody is getting employed because capitalists won't build any plants in the first place citing depreciation fears as it will be a daily occurrence.
What they'll do instead is wrap up and move to a more sensible economy.
Die this idea op.
Your price gagging fantasy can only work in an ideal country that has all it needs so much so that you don't need to import anything(goods or service) so you don't need to even establish an exchange rate with any other currency,
But I'm sure you know no country is this self sufficient so what's the point?

CondemnBattery:
Dumb question

u re d one really dump here my brother. am sure dis question as been really on almost everybody mind.

jumper524:
funny enough many people think playing by the rules is what strives the economy. Top European countries don't play by the book.

What are you saying....do you follow world financial or business news at all? Without those policies the whole financial system will be in absolute shambles...

PNomsule:
I am really just curious as to "why can't we just print more money and solve the poverty problem in the country?"

Terms like "inflation" and the "devaluing of the naira" are the usual buzz answers to that question. Also, people give the example that if we were to print more money and just give everyone N5,000,000 for example, then everyone would go out and buy things, thus making "THINGS" more scarce and in short supply and hence driving up the prices of things (simple demand/supply economics). But herein lies the catch for me... With TRUE unemployment rate somewhere around 33% in the country, if DEMAND for "THINGS" rose, then I would think that companies would WANT to hire more people and build more processing plants to keep up with demand and raise their profits. So, the influx of cash (printed money) would seem to solve the unemployment problem.

Again, we have agencies that regulates pricing in the economy: PPPRA, Price Control Board (Ministry of Commerce) etc, with those, can't the likely over pricing of commodities (THINGS) be controlled and gazetted to avoid the story of "too much money chasing fewer goods"?

In the final analysis, a robust and health competitive economy would have been created and underemployment issues largely solved.

Economists and Analysts lets discuss?

Op I reason with you..in fact that is what USA does to sustain their economy...they simply printed more money...
Anyway from your analysis that can only be possible if we produce what we eat ourselves..we build factories ourselves and don’t have to import...

A305:
Not technically the best option to solve inflation and it would cause more inflation because there would be too much money in circulation chasing fewer goods. This tends to weaken the value of the currency till one loaf of bread could be sold for one million, a text book example of what happened in Zimbabwe some years back.

Zimbabwe kept printing more money to cushion inflation and kept introducing new currency face value until they had one million note face value. It ended in chaos, poverty and protest for a regime change.

So, what you should understand is money management is key factor to stimulating and running the country's economy, when you ruin that by printing more money, you tend to ruin the country itself.

What CBN does to tackle inflation is raise interest rates to discourage banks from lending out the money that creates new money in the system. As every loan in the system creates new money.

the dollar is the highest currency in circulation and its still valuable. There's cash shortage in Nigeria, go to market and see shops overstocked with little or no buyer, inflation can only happen if shops are not overstocked.