amrichy:

you still didnt answer the question clearly. Thanks for trying sha. Bye

Let me try

Caveat: I am not an Economist.

Naira is spent only in Nigeria.

We rely on outsiders for infrastructural development. It is always the Chinese or the Lebanese handling projects...

Most equipments would be sourced for outside Nigeria (in case of big projects). Naira can't be used in getting them.

We are consumers nation, we produce nothing. Inflow of dollar is low compared to the outflow.

And the Nigerian government has always complained about low Forex, yet they're not doing anything on it.

They capped monthly usage of dollar on debit cards at $100 to ensure we are not "wasting" the little dollars they have for the obvious reason.


...and there are worst examples on why producing more money would be a bad idea, they call it Hyperinflation. It happened in Germany, it happened in Zimbabwe. They all thought they could solve their economic woes with more funds. As a result, barrow-load of money found it difficult to buy mere bread.

An average man is extravagant in nature. He tends to abuse what he has in merry.

Check the scammers (so-called Yahoo boys) around you, you see how they live their lives each time they "hit"? That's exactly how an average man would live if he has "the money".

A free flow of money in merry would mean most people would cease to work. Why do I need to work when I already have the money? The little production we enjoy on basic stuffs would drastically reduce along with it.

...

Ask Zimbabwe nah, by the time naira becomes so cheap that bread turns to 1million your eyes will open

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Nigerians are really ignorance, CBN don't print money here, every money is printed in Zimbabwe

The federal government of Nigeria influences the supply of money in circulation to avoid high inflation growth. Nigeria cannot be rich by printing more money because there are no economic activities to match the amount of money to be printed.

amrichy:

try to explain clearly and logically how printing more money will result in a rapid decline in the value of the currency.
if the government prints 5 trillion naira for instance and spend this money on infrastructure, agriculture, education and job creation, how will this cause the value of our currency to drop?

think about the whole money dangote has in his bank account, now instead of taking of of the whole billions more gets printed, now dangote sees all his money becoming useless so he decides to spread it all around instead of keeping and then ppl have more than enough money than they needed anyways so they start lavishing and there sellers increases their costs im other to make more profit thereby making money loose value drastically. It's even happening now eg coz of yahooboys now u can't get a jean less than 15k, something that would have sold gracefully for even 2k5 without negative effect. Money is backed by services of goods lest it is worthless

COdeGenesis:
Money is a store of value. Money is also a medium of exchange. If your economy is not valuable it's pointless printing money because no one would want to transact business with you. For instance when they sell a car to you in exchange for naira that has no value, the money becomes useless to the seller because he cant exchange it for something valuable in the market. Going by this you will have a scenerio whereby there will be surplus of naira in the market, when there is surplus of money the value of the money will drop and price of thuings will increase to accomodate the surplus cash. So in conclusion it's about the value of the money, as in the exchange power.

here's another way to look at it. Why is sex valuable even though girls are everywhere? Coz girls dont give it for free lol somehow someway u will pay for it but why are men discarded and disvalued coz an average man will still pay you to have sex with u haha. I know with this example many will get the logic now

Idamond:


I seriously enjoy these
ur point.

for ex why not print enough money and let it be restricted from people. just use the money for infrastructure, agriculture, education and so on that would benefit us in future.

We borrow because we don't have the expertise and capital required (fx) to build high tech infrastructure.

All the major roads, railway, ports etc were built by foreign experts and companies.

You can print as much as you like in an economy where there is high skilled labour and huge competitive corporations as long as the aggregate demand is there .

The inflation gap (difference between gdp nominal and money supply) is buffeted into these companies by investors, this only works well in an expansionary fiscal policy environment where interest rates are so low so much so that the stock market gulps up excess supply of capital.

In summary we are not productive enough to be able to print without putting inflationary pressures on the economy.
.

Stundey:


Let me try

Caveat: I am not an Economist.

Naira is spent only in Nigeria.

We rely on outsiders for infrastructural development. It is always the Chinese or the Lebanese handling projects...

Most equipments would be sourced for outside Nigeria (in case of big projects). Naira can't be used in getting them.

We are consumers nation, we produce nothing. Inflow of dollar is low compared to the outflow.

And the Nigerian government has always complained about low Forex, yet they're not doing anything on it.

They capped monthly usage of dollar on debit cards at $100 to ensure we are not "wasting" the little dollars they have for the obvious reason.


...and there are worst examples on why producing more money would be a bad idea, they call it Hyperinflation. It happened in Germany, it happened in Zimbabwe. They all thought they could solve their economic woes with more funds. As a result, barrow-load of money found it difficult to buy mere bread.

An average man is extravagant in nature. He tends to abuse what he has in merry.

Check the scammers (so-called Yahoo boys) around you, you see how they live their lives each time they "hit"? That's exactly how an average man would live if he has "the money".

A free flow of money in merry would mean most people would cease to work. Why do I need to work when I already have the money? The little production we enjoy on basic stuffs would drastically reduce along with it.

...

Thanks a lot man. It's all perfectly clear to me now. Let me summarize what I've learned:
1. Nigeria can only print notes in naira currencies and these can only be spent here in nigeria. We cannot use the naira notes we print to procure/buy goods (or services) from other countries.
2. The naira notes we print must be carefully regulated so it does not become surplus and lose its value consequently (this would lead to inflation).
3. To get goods and services from foreign countries, we need foreign exchange (dollars majorly). And because we import a lot of goods and services from other countries, we need a lot of dollars too.
4. Normally, we earn dollars when we export the locally produced goods to other countries (dollars is the most accepted legal tender/currency for international trade). Unfortunately, we import more goods than we export so there is usually a deficit of foreign exchange (dollars particularly).
5. The deficit in our dollars reserves makes it necessary for us to borrow as we need to buy many essential things from other countries.
So i guess the long and short of it is that we print naira and borrow dollars; we spend naira locally and dollars internationally.

amrichy:

you still didnt answer the question clearly. Thanks for trying sha. Bye

I did.

Read well or ask someone to explain to you.

stanley000:
here's another way to look at it. Why is sex valuable even though girls are everywhere? Coz girls dont give it for free lol somehow someway u will pay for it but why are men discarded and disvalued coz an average man will still pay you to have sex with u haha. I know with this example many will get th e logic now

in all honesty na now I just understand all the whole points na now I just sabi wetin dem Dey talk about

amrichy:

and what if the creation of jobs is done strategically to bring about the production of more goods?
and concerning the question asked by the creator of the thread, how is borrowing from another country better than printing our own money?

firstly printing money cause inflation in the short run but increase in output will bring about stability on the long run.
for your second question, money borrowed will be paid back while money printed won't, so this will help control the stock of money in circulation.

amrichy:

try to explain clearly and logically how printing more money will result in a rapid decline in the value of the currency.
if the government prints 5 trillion naira for instance and spend this money on infrastructure, agriculture, education and job creation, how will this cause the value of our currency to drop?

I will try to explain.

There are some things that gives money its intrinsic value that make its useful, else the notes we call money might as just well be a piece of paper.

Imagine there a hundred kids and there are not educated, have skills whatsover, they look hungry and sickly, do you think they add any value to society?

When a whole country tries to get richer by printing more money, it rarely works. Because if everyone has more money, prices go up instead. And people find they need more and more money to buy the same amount of goods. ... This amount of paper would probably be worth more than the banknotes printed on it.

Printing more money has no real advantage other than for replacement of worn out notes and currencies. Printing new money is like trying to print everyday needs like foods, clothes, roads and services. Borrowing is synonymous to getting those things listed above on credit and paying later. Money printing is imaginary growth and unreal unlike borrowing which isn't a growth per se but but connotes transfer of real value.

Just seeing funny and stupid explanations, if there is too much money in circulation the purchasing power of that currency should be considered first of all, then next the amount of resources in proportion to this amount according to supply and demand the demand will increase insanely therefore sellers would have to increase prices because supply is lower therefore killing of the purchasing power of the currency, Zimbabwe is a good example. Economics students can explain this a thousand times better.

rookidmart:

Because the value of your currency will decline rapidly if you choose to print more of your currency willy nilly.
See: Zimbabwe, Venezuela, Germany after world war 1.

Zimbabwe people were buying a loaf of bread for 500,000 and in Germany they had to resort to paying workers twice daily , inflation is a very bad thing

amrichy:

try to explain clearly and logically how printing more money will result in a rapid decline in the value of the currency.
if the government prints 5 trillion naira for instance and spend this money on infrastructure, agriculture, education and job creation, how will this cause the value of our currency to drop?

You need to read this book to understand the causes of inflation and deflation and how government needs to keep a balance especially after devaluation of our Naira like a thousand time already.

If government prints money for infrastructure, etc as you pointed out? Are people not responsible for the man power? People that are going to be paid for work done? This means more money will be in circulation, and that means the bar raises high for inflation and will affect other sectors of the economy. That includes but not limited to the government’s ;

Money and monetary policy
Federal reserve
Interests rate
Fiscal policy and taxation

Conclusion: It is possible for any government to print money, but the consequences are far reaching! It can lead to total collapse of government taking us to pre historic times.

It's straight forward, money should be backed by productivity and relatively scarce , this is how it gains acceptability and becomes a store of value.

Imagine, you have been saving money from working 9-5 daily for 10yrs,and you have saved 5million, if the govt prints 5million naira out of thin air, what happens to your years of hardwork??.. it means ,there'd be people who will have more money for not doing any work at all, and both of you will head down to the same market to buy goods, the price of the goods will rise because there's more money than the available goods, while the man that got free money can price better because it's free money, you that saved will struggle because the value of your money in terms of purchasing power has dropped.

In the early days, there's a common concept called Gresham laws, it happens when govt print money, and people spend the printer money and have another alternative source of money that they hoard inorder to save value and manage inflation. When ancient kings debase gold by adding silver and other cheap metals into gold coins, the people began to spend the govt cheap gold while saving the real pure gold coins.

This is why people don't want to save in naira and they instead go and save in bitcoin or in Dollars or gold , while they spend the cheap currency like naira for day to day, but not for savings.

Zimbabwe embarked on huge printing and the currency was devalued that they had to switch to using pounds as people won't keep the Zimbabwe dollar.

kkash:


I understand this well, does it mean that scarcity of money would bring down the prices of goods and services Of a nation??

to some extent whc then make the goods to be valuable.

What do we really need in anything, no be Value ?

Malawian:

This is not answer to the question asked. If you can print your own money, why borrow from others at an interest?

Because Naira is accepted only in Nigeria unlike pounds, dollar and Euro that is accepted worldwide.... simple

amrichy:

Thanks a lot man. It's all perfectly clear to me now. Let me summarize what I've learned:
1. Nigeria can only print notes in naira currencies and these can only be spent here in nigeria. We cannot use the naira notes we print to procure/buy goods (or services) from other countries.
2. The naira notes we print must be carefully regulated so it does not become surplus and lose its value consequently (this would lead to inflation).
3. To get goods and services from foreign countries, we need foreign exchange (dollars majorly). And because we import a lot of goods and services from other countries, we need a lot of dollars too.
4. Normally, we earn dollars when we export the locally produced goods to other countries (dollars is the most accepted legal tender/currency for international trade). Unfortunately, we import more goods than we export so there is usually a deficit of foreign exchange (dollars particularly).
5. The deficit in our dollars reserves makes it necessary for us to borrow as we need to buy many essential things from other countries.
So i guess the long and short of it is that we print naira and borrow dollars; we spend naira locally and dollars internationally.

5. The deficit in our dollars reserves makes it necessary for us to borrow as we need to buy many essential things from other countries.

Not technically the deficit of our dollar reserves! Countries sometimes borrow in other to support their failing currency, maybe as a means of support for its short or long term financial plans.

SouthSouth1914:


You need to read this book to understand the causes of inflation and deflation and how government needs to keep a balance especially after devaluation of our Naira like a thousand time already.

If government prints money for infrastructure, etc as you pointed out? Are people not responsible for the man power? People that are going to be paid for work done? This means more money will be in circulation, and that means the bar raises high for inflation and will affect other sectors of the economy. That includes but not limited to the government’s ;

Money and monetary policy
Federal reserve
Interests rate
Fiscal policy and taxation

Conclusion: It is possible for any government to print money, but the consequences are far reaching! It can lead to total collapse of government taking us to pre historic times.

Thanks. I think I understand the intricacies of monetary economics a little more now. I'll also try to read the book you recommend.

Samsung004:
Up till when Gadaffi was killed, he proved economics wrong. He didn't borrow to run his country while he was in power. The country was one of the best countries in the world with good living standard and low literacy level.

You can do a little research before quoting me, please.

If Nigeria should start to mint her money today it will need good governance to back it up. If not na o.y.o case.

Lie economics.

Who created economics? Man, so you should know that it's based on perception and personal reasoning.

50% economic might be right the other 50% is for .......

Idk...

lol, then the need to develop ur own theories but proven sha

amrichy:

and what if the creation of jobs is done strategically to bring about the production of more goods?
and concerning the question asked by the creator of the thread, how is borrowing from another country better than printing our own money?

do you think there is a difference in mode of spending btw loans fr bank & personal savings ?

amrichy:

Thanks. I think I understand the intricacies of monetary economics a little more now. I'll also try to read the book you recommend.

You are welcome!

rookidmart:

I don't think Nigeria borrows naira from the IMF or any other country it borrows money from.

Also if it is borrowed, it has to be paid back - usually with interest- so it will still leave eventually.
Not so with printed money.

The money we borrow internationally, do we use it to trade internationally or do we use it locally? What stops us from printing money locally and lending it internationally to other countries with interest?

SouthSouth1914:


You need to read this book to understand the causes of inflation and deflation and how government needs to keep a balance especially after devaluation of our Naira like a thousand time already.

If government prints money for infrastructure, etc as you pointed out? Are people not responsible for the man power? People that are going to be paid for work done? This means more money will be in circulation, and that means the bar raises high for inflation and will affect other sectors of the economy. That includes but not limited to the government’s ;

Money and monetary policy
Federal reserve
Interests rate
Fiscal policy and taxation

Conclusion: It is possible for any government to print money, but the consequences are far reaching! It can lead to total collapse of government taking us to pre historic times.

But actually, the question the OP asked is about BORROWING from another country versus PRINTING your own money. Like most other people who attempted to answer the question, you only focused on the printing part. Could you also expatiate a little on why borrowing is preferable?

If you print too money, you've what called hyperinflation, when the currency lose most of its purchasing power. You can google zimbabwe, east germany for reference, but if you borrow you'd eventually have to pay the money back thereby reducing the circulation of money in the land.

SegFault:
Just seeing funny and stupid explanations, if there is too much money in circulation the purchasing power of that currency should be considered first of all, then next the amount of resources in proportion to this amount according to supply and demand the demand will increase insanely therefore sellers would have to increase prices because supply is lower therefore killing of the purchasing power of the currency, Zimbabwe is a good example. Economics students can explain this a thousand times better.

Dunning Kruger effect

You didn't even understand the question let alone answer it.

Check my previous email, it addresses everything but it might be difficult for you to in because a lot was squeezed in

yetunsbay:
do you think there is a difference in mode of spending btw loans fr bank & personal savings ?

NO! The source of the money (whether it is a loan, personal savings, gift, inheritance or even stolen) should normally not cause any significant difference in the "mode of spending". Your needs and wants should be the factors determining how you spend your money.

Malawian:

The money we borrow internationally, do we use it to trade internationally or do we use it locally? What stops us from printing money locally and lending it internationally to other countries with interest?

lol which country did u want to borrow Naira notes have u forgotten our currency can only be spend in Nigeria here

seanwilliam:
in all honesty na now I just understand all the whole points na now I just sabi wetin dem Dey talk about

ur welcome ma niggi