Why We Can’t Print More Money: The Impact of Inflation and Hyperinflation

Why We Can’t Print More Money? And if we do, it won’t make any sense… why is that? We will understand this quite well, but in simple language.

The printing of currency entirely depends on the country’s services, available resources, and various types of goods. Let’s take an example:

Suppose a new smartphone has launched in a country, priced at 500 rupees, and three high-earning people come to buy it. One person has 500 rupees, one has 300 rupees, and one has 800 rupees.

Now, let’s see how the deal for the phone would go:

1. The person with 500 rupees can easily buy it.
2. The person with 300 rupees cannot afford it.
3. The person with 800 rupees can easily buy it too.

So, who will the shopkeeper sell the phone to? The shopkeeper has two options. What if the person with 800 rupees buys the phone by paying 800 rupees? This is 100% possible.

Now, coming back to the topic of currency If the government of the country gives extra money to the person who has 500 rupees, let’s say they give him 2000 rupees, what happens? Clearly, the person can offer more than 800 rupees and buy the phone, right?

So, this teaches us that if the government is giving extra money, it’s only increasing the value of things, and nothing else. Everyone will use the extra money to buy fewer items at higher prices, and eventually, a time will come when the country will have more money but fewer resources, Then poverty will come to the picture.

Let’s explain this with another example:

Hyperinflation in Zimbabwe – This is the biggest example of a currency crisis in history. In 2008, the Zimbabwean government started printing unlimited money, and as a result, the money being printed was becoming worthless, and people ended up having millions of dollars.

In such a situation, what happened was that people were offering millions for a small plate of food or just small quantities of goods. The country’s poverty increased so much that even though people had money, there were no resources available. This caused Zimbabwe’s currency value to plummet.

This is why hyperinflation occurred, meaning that the prices of goods were increasing rapidly, but the availability of resources and goods remained the same.

So, this is why no country can print unlimited money because the result will be that the country suffers, and the situation could become even worse.

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