Wednesday, December 19, 2012

Printing money and hyper inflation

In this blog im going to discuss what does printing money means and why goverment resort to this solution and what are the outcome of doing such thing, Printing Money creates a sense of nervousness amongst both economists and the general public. If a government prints money faster than the growth of real output it reduces the value of money thus causing hyperinflation such as goverment of Germany and recent years the Goverment of Zimbabwi face and you can see the result so of hyperinflation will eventually hurt the economy and its public which means if one who is experiencing hyperinflation would buy a bottle of water it will cost you million of the locla currency and this is because the devalue of money and it will burden the public and the country will face deaper recession which will take decades to recover from. Governments often resort to printing money when they cannot finance their borrowing.
why do Goverments prints money, it might be becuase they fear of deflation, lets first describe what is deflation, deflation is a decrease in the general price level of goods and services, Deflation occurs when the inflation rate falls below 0% This means a person can buy more goods with the same amount of money over time, the effect of deflation is
  1. Decreasing nominal prices for goods and services
  2. Increasing buying power of cash money and all assets denominated in cash terms
  3. May decrease investment and lending if cash holdings are seen as preferable (aka hoarding)
  4. Benefits recipients of fixed incomes
  •  (Wikipedia).
 

1 comment:

  1. Dearest Esteems,

    We are Offering best Global Financial Service rendered to the general public with maximum satisfaction,maximum risk free. Do not miss this opportunity. Join the most trusted financial institution and secure a legitimate financial empowerment to add meaning to your life/business.

    Contact Dr. James Eric Firm via
    Email: fastloanoffer34@gmail.com
    Whatsapp +918929509036
    Best Regards,
    Dr. James Eric.
    Executive Investment
    Consultant./Mediator/Facilitator

    ReplyDelete