How come America doesn’t just make more money to solve the money crisis?

10 Responses for "How come America doesn’t just make more money to solve the money crisis?"

1. Say October 20th, 2009 at 9:47 am

   the value of a dollar will go down the more of it their is
   youll learn this in government in highschool
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2. Jason October 20th, 2009 at 10:25 am

   Because then the money won’t be worth as much. The more of something there is around, the less it’s worth.
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3. Li~Li October 20th, 2009 at 10:47 am

   Printing more currency would make our money lose it’s value even more!
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4. doug4jets October 20th, 2009 at 11:12 am

   Inflation. The more money is in circulation, the less it is worth, the more things will cost.
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5. The world is grey and purple October 20th, 2009 at 12:01 pm

   Like some others have said, if we print money (I’m assuming that is what you mean) the value of each dollar will go down compared to other currencies.
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6. Ashley C October 20th, 2009 at 12:37 pm

   because you need something to back up the money.

   the movie bandidas with salma hayek and penelope cruz is a good example. they talk about money and the gold to back up the money. you have to watch it.

   plus it creates a inflation.
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7. 3r1cW October 20th, 2009 at 1:20 pm

   When I was your age, after watching all those cool documentaries on the US Mint and seeing them just print off 5×5 sheets of 100 dollar bills, I asked the same question.

   The reality is that while we do possess the ability to stamp out coins and print off thousands of dollars in paper assets every day, those products serve as a representation of actual wealth.

   For every additional dollar added to the circulation, the value of each dollar decreases. Which means that it would take more money to purchase goods and services.

   This is also the reason that the fed destroys millions of dollars in paper and coinage per year, because if they didn’t that money would remain in circulation. (also why when people get a vintage 10 dollar bill they freak out like its something no one has ever seen before.)

   In a perfect world, we could print all the money we needed. Unfortunately this isn’t a perfect world, and cash and coins aren’t really worth anything in and of themselves, rather only a physical representation of our entire nations value.

   Hope this helps!
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8. Tyler L October 20th, 2009 at 1:35 pm

   Printing more money would lead to inflation, which is bad.
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9. Spotty J October 20th, 2009 at 1:48 pm

   The problem here is NOT a lack of money, it’s a lack of economic activity. You could temporarily help someone by giving them money once, but in the long run they need regular income, not a one-time handout, and basically that applies to the whole economy.

   And that ties in to the money issue. It is NOT quite true that adding money to the money supply automatically creates inflation — in fact the money supply generally does increase year after year and we don’t have significant inflation.

   The key is that economic activity and our ability to increase our production goods and services needs to increase along with the money supply; if not, THAT’s when you have inflation, or too much money chasing too few goods.

   The government & Federal Reserve now are in fact taking steps to increase the money supply through the banking system. But the point is not to hand everyone a pile of cash to spend … that would only cause inflation. The point is to stimulate economic activity through bank loans to businesses, which leads to more income for individuals and for the economy.
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10. chris n October 20th, 2009 at 2:31 pm

    all the answers before me are wrong and so is your dad, at least partially.

    Money supply is controlled by the fed. The demand for money along with the supply determine the interest rate. Lower interest rates would occur if you printed more money. Lower interest rates would lead to more investment. Since the interest is the price of investment. Now, I don’t mean stock investment. When economist say investment, they mean the purchase of capital to produce good and services.

    So, if you print more money 2 things will happen: investment will increase. Also, the demand for all normal goods and services will increase. Inflation may occur, or it might not. It depends on which is greater, the increase in aggregate supply or aggregate demand.

    In general, however, we assume velocity (the rate of which money changes hands) will increase with more money floating around. Inflation will occur.

    But, inflation’s cost are not real in most cases. They are nominal (nearly insignificant). Printing money can solve short-run fluctuation problems. CAN is the word. Not will.

    Doug is wrong. Things don’t cost more. The cost of something is what you give up to get it. At first, it would appear the if inflation occurs, we give up more for goods. More money, yes. But inflation occurs with wages as well. So, if wages adjust 1 for 1 with inflation, things cost the same. More explanation may be needed. If a meal at mcdonalds cost 8 dollars and I make 8 dollars/hr, that meal cost me an hour of work. Now, if inflation occurs and a meal cost 10 dollars but I make 10 dollars/hr, the meal cost me 1 hour of work. Now, the economic neophyte may argue that they "earned" their raise, and that this is unfair. But, their wages increased because of the increased aggregate demand because of the excess money.
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