Why Doesn't the Government Just Print Money?

     The answer is the government does.  After Covid shutdowns led to widespread loss of jobs, the government put money in people's bank accounts.  People were very grateful to the government for depositing money in their bank accounts.  Those people don't realize that when the government does this the value of their money goes down.  The government can print money but it can't create wealth.  Printing money doesn't create goods that people need.  

      Let a store owner has only 10 apples and his customers are hungry and their families are hungry too.  The store owner decides to auction off the apples to the highest bidder.  Whoever pays the most will get the apples.  There are 10 people who want the apples.  Each has a dollar.  The result will be that the owner will sell each apple for a dollar.  What if the government gives each of the hungry people a million dollars.  One person might still offer the store owner $1.00 for an apple.  Another hungry person might be willing to pay more since he has a million dollars and he's hungry.  He might offer the store owner $20.00 for all the apples.  The next person who is also very hungry might offer even more since he's a millionaire and he's hungry too.  Soon each one will offer more than the other for those apples.  An apple that started out costing $1.00 will wind up costing a lot more.  Printing the money causes the purchasing power of the money to go down.  In the end no one is better off than they were before the money was printed.  In fact they could wind up being worse if the printed money is wasted.  Let say the apples sold by the store owner were grown by a farmer.  Government leaders might pay the farmer to use his land as a dumping ground for solar panels and wind turbines that don't work anymore.  Then the farmer can't grow as many apples.  Then the storeowner won't have as many apples to sell.  Maybe next time he'll only have 5 apples to sell.  if people are very hungry they'll pay the same amount of money for fewer apples.

The problem with printing money is discussed in the video below.


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