Keep printing money and we will all be rich.?

OK I am a real thicko on economics.

So the bank of England is printing loads of new money.So how can this money have any value.?

I mean if its that simple why don't they print loads of the stuff,and we can give it to the poor people so they can have a better life.?

Where is the value in a printed piece of paper.?

Sounds like a nice little scam I should buy shares in.

Earl

 

[directmarketingadvice]

So the bank of England is printing loads of new money.So how can this money have any value.?

Because it leeches value from the other pounds that are out there.

i.e. the same amount of wealth divided by a larger number of pounds means each pound is worth less.

So, the £200bn "injected" into the economy is really just a tax that averages £3,300 per person.

Steve

 

Because it leeches value from the other pounds that are out there.

i.e. the same amount of wealth divided by a larger number of pounds means each pound is worth less.

So, the £200bn "injected" into the economy is really just a tax that averages £3,300 per person.

Steve

Thanks for that Steve ,still don't quite understand.

If I buy a new telly it still costs me say £200.?

so where does the lesser value of my pound show up.?

Earl

 

[directmarketingadvice]

Thanks for that Steve ,still don't quite understand.

If I buy a new telly it still costs me say £200.?

so where does the lesser value of my pound show up.?

Earl

It could happen in a number of different ways.

For example, when the company that imports TVs into the UK have to pay more to buy them from the overseas manufacturers.

Alternatively, if the money ends up as credit within our society, more people will be able to afford new TVs. And, as a result, supply & demand will increase the price.

However, it should be remembered that there are deflationary forces within the economy (which should increase the value of money) and this "fake" money is fighting against those.

So, instead of the price going up, it might stay the same, rather than reducing. Or, it might reduce, but by less than it should.

Steve

 

[trustme]

sirearl you are not a thicko, that also frazzled my brain. :|

 

[jasonnoguchi]

Econs 101, more currency = less value = inflation.

That is why they are always concerned with inflation after each economic recovery cycle because governments tend to print too much money during recessions.

 

[Cornish Steve]

Earl decides he want to become mayor of his home town. The problem is that no one likes him (this is fiction, Earl!). So, in the immortal words of Baldrick, he hatches a cunning plan.

Earl disappears into his garden shed where his top-of-the-line printer is installed. He spends all night printing bank notes worth hundreds of thousands of pounds. The next day, Earl goes on the local radio station and announces that he's going to build a fabulous new football stadium and put together the next great English team. Everyone cheers. Earl buys the land, pays the workers, buys all the top players, and lets everyone watch premiership games free of charge.

Earl is now the local hero. Everyone cheers whenever he shows his face. He gets hugs from beautiful women, and little children sing songs about him in school. At the local pub, it's free drinks all 'round when Earl arrives. At home, when no one is looking, Earl laughs and laughs and laughs.

What's so funny? Well, it's the people of the town who bought the land. It's the workers of the town who built the stadium. All his neighbours paid for the salaries of the new football players. It's the locals who are paying for the free tickets. They did all the work and sacrificed big time, but Earl is elected mayor by the largest majority in history.

What did Earl actually do? He printed money and added it to the general circulation. As a result, the total amount of money in everyone else's pocket was devalued by the cost of land, the stadium, the new football team, and the tickets. Because no one understands economics, Earl gets all the credit.

The last I heard, Earl was casting his beady eye at 11 Downing Street. And my crystal ball tells me that, by this time next year, there'll be ten pounds to the dollar.

 

[trendy kid]

Yeh we all know money is worthless. Have a look on the banknotes ' I promise to pay the bearer on demand the sum of 20 pounds'.
OF WHAT ? It used to say sterling silver but we don't have any. Someone did actually go and ask the bank of england this not too long ago and they shut the bank and called the police.
So money is worthless its only value is what we belive it to be.
I always write accepted for value on my tax bill and send it back to the inland revenue. Why not. Surely one useless bit of paper is as good as another in this game !

 

Earl decides he want to become mayor of his home town. The problem is that no one likes him (this is fiction, Earl!). So, in the immortal words of Baldrick, he hatches a cunning plan.

Earl disappears into his garden shed where his top-of-the-line printer is installed. He spends all night printing bank notes worth hundreds of thousands of pounds. The next day, Earl goes on the local radio station and announces that he's going to build a fabulous new football stadium and put together the next great English team. Everyone cheers. Earl buys the land, pays the workers, buys all the top players, and lets everyone watch premiership games free of charge.

Earl is now the local hero. Everyone cheers whenever he shows his face. He gets hugs from beautiful women, and little children sing songs about him in school. At the local pub, it's free drinks all 'round when Earl arrives. At home, when no one is looking, Earl laughs and laughs and laughs.

What type of printer should I buy.?:|

Earl

 

[GreatSEO]

You may need some coins as well how about do you need a partner :')

Dave

 

I recently watched a documentary about money being printed in the US - It was a slow day at home.

It explained that new money is printed to replace printed bills which were too damaged to be used any more. Apparently if you have really damaged notes, you can send them somewhere to be analysed where the notes will be put back together. You then receive a cheque for the amount which you sent in and the damaged notes are taken out of circulation. There must be a similar kind of thing in the UK.

 

[willi22]

china aren't too happy about all this money printing either especially since they lend us the money to buy they're stuff and in return we get too greedy then decide to try and inflate away the debt. what happens if china stop buying government bonds.

 

[DataWise]

Suppose the same amount of energy (work) must be expended in order to produce 21 carrots, or 3 cabbages, or 21 potatoes.

Each week, Tom produces 21 carrots, Dick produces 3 cabbages, and Harry produces 21 potatoes. Tom trades with Dick - 7 carrots for 1 cabbage, and with Harry - 7 carrots for 7 potatoes. Dick and Harry each trade with the other two traders in a similar manner so that they each end up with 7 carrots, 1 cabbage and 7 potatoes. (Convince yourself with a little pencil and paper exercise).

This means that 7 carrots are worth 7 potatoes or 1 cabbage, and 7 potatoes are worth 1 cabbage. Each lot of items has a value in terms of other items, and so they can be exchanged fairly.

One week, Tom turns up at the marketplace without his carrots. For some reason, he has decided not to trade them, but instead store them for a while. Dick and Harry agree to let him have potatoes and a cabbage in exchange for IOUs. So this week Dick and Harry each have 1 cabbage, 7 potatoes and an IOU for 7 carrots, while Tom has 1 cabbage, 7 potatoes and 21 carrots.

Each IOU represents a promise of energy (work to be done) to the value of 7 carrots.

Over the following two weeks Dick and Harry do the same thing, and each trader ends up holding two IOUs each, one from each of the other two traders. One day, Tom decides that instead of exchanging one of his IOUs for 7 potatoes and the other for a cabbage, he would like 14 potatoes. Tom approaches Harry and exchanges his two IOUs for 14 potatoes. They make the necessary adjustments to the wording on the IOUs. Eventually the three traders hold a meeting and agree that in future, instead of writing different types of IOU for potatoes, carrots and cabbages, they will write just one type of IOU for vegetables.

As time passes, other products and services come on to the market, and the IOU system is holding up well. The 'vegetable IOU' has since been replaced by the 'product or service IOU'. At this stage the traders in the system are printing and exchanging money for goods instead of exchanging goods for goods.

One day Dick notices that nobody is keeping count of the IOUs he holds, so he forges one to get an extra product. Eventually he is caught and punished. The flaw in the system is rectified by nominating a banker to print all the IOUs for the economy - legal tender.

Remember when Tom wrote those first IOUs to aquire a cabbage and some potatoes without giving any carrots in exchange? What actually happened there? What was the total value of the two IOUs that he wrote? In effect, he printed himself some money and spent it on potatoes and a cabbage. The value was equal to the 14 carrots that he withheld in storage. Those carrots represented energy that he had expended. The two IOUs represented a promise to expend the same amount of energy for the benefit of the IOU bearer - "I promise to pay the bearer...".

How much money should the bank print for the economy? It would seem sensible to print enough money to represent the value of the energy that the traders need to buy on market day - no more, no less. To make things simpler to think about, let's flash back to the early days when only carrots, cabbages and potatoes were being traded, and join Tom, Dick and Harry on market day before the market has opened for trading. There are 21 carrots, 3 cabbages and 21 potatoes in the economy, and each trader needs to end up with 7 carrots, 1 cabbage and 7 potatoes. Each trader sells only two thirds of what he has, and buys a third each from the other two traders. This means that each trader needs an amount of cash equivalent to two thirds of the value of the goods he has.

The granularity of the currency is set to allow the traders to buy single carrots and single potatoes, so 1u (unit) buys one carrot or one potato, and 7u buys one cabbage. Therefore we print 42u and distribute it evenly between Tom, Dick and Harry so they have 14u each to spend. At the end of market day, each trader ends up with his 7 carrots, 1 cabbage and 7 potatoes, and they still have 14u each.

(I suppose we could print enough money for all the goods to be bought and sold, that is, give the traders 21u each. This would allow the possibility of all the traders clearing their stock.)

Fast forward back to the present where the economy is more complex. More goods are being traded and more money has been printed to reflect the amount of expended energy (goods) in the economy. Everyone is happy. There is equilibrium.

Then one day there is a general election and Gordon Clown is appointed Chancellor of the Third Reich, er, I mean Exchequer! Herr Clown makes a complete pig's ear of the economy and decides to print wads of cash for Tom, Dick and Harry when they haven't yet expended the energy to produce more goods.

What do you think will happen? The goods can't suddenly leap in *real* value in terms of the energy expended to produce them, only in nominal value, which in terms of energy is equal to zero. The energy which was expended to produce the goods cannot be increased! This is why we cannot get richer by conjuring up money out of thin air.

Paul Reed