The money in circulation/supplied in any economy must grow in paripassu with output of goods and services. When we have too much money pursuing few goods and services, it leads to increase in the price level or succinctly put=leads to inflation. Inflation leads to the fall in value of the naira in relation to other currencies. Since nigeria is an import dependent country, we will need more naira to purchase a unit of the dollar (ie since the dollar is the internationally accepted currency in international trade). let me be more analytical. Take for instance that the exchange rate of the dollar to naira is $1=N150. As a result of inflation, the  exchange rate becomes $1=N180. Hence an importer who fomerly spends N150 to import goods will now spend N180 at the current exchange rate. This will cause the price of the imported goods to rise further in our domestic economy. This will lead to further inflation and depreciation of our national currency if proper monetary and fiscal policies are not put in place.This situation will even be worsened if we do not have enough foreign exchange reserve to sustain import.
What i am trying to say is this: for money supply to increase, output( ie productive capacity,  etc) must increase ,such that the amount of money in circulation will clear the market of goods and services. IF the money  supplied is greater than output of goods and services, inflation becomes the inevitable(ie to much money pursuing few goods). Thus if Nigeria must mint more money to better the life of its citizens as the OP rightly suggest, she must first increase her productive capacity via indusrialization and reviving our agricultural sector so that this money will find goods to buy. Any thing less than this will only amount to these monies being printed becoming toilet tissues. This is  the singular reason why countries like Japan and Qatar can afford to mint more money to curb her natural disaster and carry out developmental projects respectively  because there productive capacities are very high and when these monies minted  flows back into there economies will find enough output to buy, hence there will be little or no inflation. Hope i have made a little point here. Thanks

adeibi:

My heart bleeds for Nigeria.
There seems to be no hope and that's very worrisome.
9 years to the year 2020 and we've not achieved any of the visions.
Things are easier said than done I guess.
We're very good in visionising but very poor in making it a reality.

The number 1 and most important step to starting/achieving industrialisation is having a constant power supply.
That should be numero uno on Bros GEJ'S list.
If that's the ONLY thing he can achieve then he has achieved everything.
He should pursue it squarely and stop jumping from one project to another thus leaving them half way.
He should completely solve the POWER problem, if he has more years to embark on another project, fine, but if he doesn't, the next administration will choose another and solve completely too and so on.
That's the only way I see the change we want coming to reality IMO.
I love my country and I hope my dreams for this country come to pass

2bosun:

It's easier said than done my sister, trust me in this Nigeria, some people would rather die than there be constant power supply. That's the root of the problem that needs to be dealt with. It's almost impossible because you would have to change people's thinking pattern- I weep for this country whenever issues like these are brought up. It's not just the leaders- everyone has to be on the same page for Nigeria to move forward.

There's something we need to realize. Even if GEJ manages to stabilize power supply during his tenure, what about his successor? What guarantees do we have that his successor would consolidate on his successes? That is the biggest problem with Nigeria. We need to understand a fundamental fact: Individuals may instigate/initiate development, but ONLY institutions can SUSTAIN development. The stability of the USA's power supply and public utilities does not depend of whether the sitting president is Obama or Obioma. The institutionalized systems and structures are self-regulating and self-activating. That is what we lack in Nigeria. Even if GEJ manages to rebuild the power infrastructure and ensure 24/7 power supply during his tenure. The next president might reverse the progress and take us back to square one by permiting mediocrity, corruption and mismanagement. What this means is that there must be institutional mechanisms that ensure maintenance of systems and processes regardless of who is in power. Do we have that in Nigeria? For example, the Fashola that is heralded as perhaps the most 'performing' governor that Nigeria has had in recent times, how sustainable (and self-sustaining) are his legacies? If perchance an Alao-Akala or Lucky Igbinedion kind of character succeeds Fashola as governor in 2015, how long will it take to undo Fashola's modest legacies? Less than 3 months! So to what extent can Fashola claim to have developed Lagos if the so-called development is not sustainable and manageable on an ongoing, long-term basis? That is the fundamental development challenge that Nigeria faces. Development may be initiated by individuals, but it is seldom sustained/maintained by individuals. It is all about institutions. . .which are almost non-existent in Nigeria.

It is really a pathetic case. I don't think much would happen in our liifetime. We would all be grandfathers and grandmothers. . .and yet things might only get worse. It's difficult to be an optimist when the issue at stake is Nigeria.

proO1:

There's something we need to realize. Even if GEJ manages to stabilize power supply during his tenure, what about his successor? What guarantees do we have that his successor would consolidate on his successes? That is the biggest problem with Nigeria. We need to understand a fundamental fact: Individuals may instigate/initiate development, but ONLY institutions can SUSTAIN development. The stability of the USA's power supply and public utilities does not depend of whether the sitting president is Obama or Obioma. The institutionalized systems and structures are self-regulating and self-activating. That is what we lack in Nigeria. Even if GEJ manages to rebuild the power infrastructure and ensure 24/7 power supply during his tenure. The next president might reverse the progress and take us back to square one by permiting mediocrity, corruption and mismanagement. What this means is that there must be institutional mechanisms that ensure maintenance of systems and processes regardless of who is in power. Do we have that in Nigeria? For example, the Fashola that is heralded as perhaps the most 'performing' governor that Nigeria has had in recent times, how sustainable (and self-sustaining) are his legacies? If perchance an Alao-Akala or Lucky Igbinedion kind of character succeeds Fashola as governor in 2015, how long will it take to undo Fashola's modest legacies? Less than 3 months! So to what extent can Fashola claim to have developed Lagos if the so-called development is not sustainable and manageable on an ongoing, long-term basis? That is the fundamental development challenge that Nigeria faces. Development may be initiated by individuals, but it is seldom sustained/maintained by individuals. It is all about institutions. . .which are almost non-existent in Nigeria.

It is really a pathetic case. I don't think much would happen in our liifetime. We would all be grandfathers and grandmothers. . .and yet things might only get worse. It's difficult to be an optimist when the issue at stake is Nigeria.

ok i hear you but let him do it first.
If we continue thinking like you i.e the fear of a good successor then we'll never get anywhere o.
Jonathan should do his work and leave us to worry about his successor.
Mind you, Nigeria is now awake in terms of voting. It's unlike before when people used to sell their future @ least you saw that in the last election.

What if lagos gets a new gov better than uncle fash come 2015.
Do u know lagos will gradually become the centre of attraction and history will have it that fashola started the revolution just like in the music industry.

That's how we ought to think.
GEJ should finish it and stop dabbing from one to another thereby dumping half baked projects for his successor who will be too confused to know where to continue from.

Great Post.

This thread worth what every Nigerian should have their comments on.

There are many questions to be answered concerning many problem arousal causing abject poverty in Nigeria. Inflation or deflation, our dear naira had already lost its value even at home (don't deceive yourselves), take for instance, if you spend N5 <N5 is basically the truly lowest denomination going out-dated> out of N500, in the next moment you will have to calm down and recalculate over and over and over again how it was spent, thinking you lost some out of the money due to having that huge amount of money while buying so little thing with it. Thus, this was not how Nigeria was.

I am not an economist yet by reading from this thread i'd realized great understanding of what the posters initial question was about and a lot of replies had answered a great deal, but there is always BUTS when it comes to Nigerian matter at hand. It's plain and simple that we all know the situation this our dear country is in but the truth is our governments are not doing the right thing at the right time which is the cause for framing VISION 20-NOTHING. I wonder what their problems are. to simply think for ways to make this country a better place, they can't do. God the almighty will save us one day.

Nigeria is a great nation of which i believe we don't really have to depend on fake dreams when we can wake up and rise up and make our country a better place for everybody to live, and gladly say the future is today (the future shouldn't be when we are dead, the future is while we are alive, the future is now). Nigeria too can become a developed country if we change our ways from bad to good, when we learn to have real love for one another. It is cruelty and fake love (abnormality, madness and demo craziness) for some human beings to steal this country money (millions and billions of money) by style, it is likewise uncalled-for mentality for government to receive millions of naira in their bank accounts as monthly salary (without delay) while minimum wage is still a question to pay an answer to. Do we run a crazy governmental system here?

It is great shame on all our leaders, our governments. They virtually do nothing to make the masses live better throughout their years in the office.

The issue in Nigeria is not to print excess money (pardon me if that's a mistake), meanwhile money could be printed if necessary to fill in the gaps of this problematic Nigeria, If more money is printed our government stands another chance of robbing it again and have excuses to give us grammars (jargon) and tell us we have over-supernatural-hyper-inflated-inflation (God forbid). The issue is to ask why we have heartless, wicked and inhuman leaders (who doesn't care for citizens, at time i wonder why we vote, when the politicians tease us like kids), why would some people fill their pocket with billion of naira (when you wont take a dime with you when you are dead).Yet the government (still negotiate a few thousand naira) cannot meet up with the minimum wage.

The money shared by the leaders (governments) should be drastically decreased, perhaps the money could be circulated, there wont be inflation. It is just to let the common man live a life worth living.

Although whether being economist or not, we should leave psycho aside and come to our common senses to make our own world a place worth living, for old and young, girls and boys, man and woman.

Nigeria have all (resources) it takes to have good and affordable education, good and affordable health care, better roads, stable and steady electricity power supply, good tap water, safe security, good and affordable accommodation to list but a few of which it could be implemented with Nigeria monetary account (because this God blessed country is really rich but we [the masses] live in pain and poverty) not from the leaders individual bank accounts.

The government should look into the right direction and live with the people they rule, in other to know how we live life and make the right changes to the economy and to Nigeria as a whole.

There are many solutions to Nigerian problems, we just need the right people to apply those solutions at the right time which is now.

Nigeria will arise to its glory for the whole wide world to see again and Nigeria will stay glorious, (Amen).

It is a fact that there are many areas that require development in Nigeria: Power, Education, Legal system etc.

However, CORRUPTION is the number one thing that needs to be addressed (and it can be done in tandem with the above). The level of corruption in Nigeria makes trying to run that country akin to fetching water with a seriously leaking bucket. It can only lead to frustration.

Any leader that doesn't have a zero-tolerance attitude to corruption is not yet serious.

Any way you look at it , it ends at the big word HYPER-INFLATION .Generally life is never meant to be Fair , if you don't have the POOR you wont have the RICH .Printing a lot of currency wont make the poor closer to the rich(since the poor will still get less form the  printed money than the rich).I think we need to create a model that will work for us other than copying what others do .one of the biggest ditch for developing countries is GLOBALIZATION

[b]This explanation completely ignores
the fact that when the government
“borrows” money from the Central
Bank that’s exactly what it does. It
creates the money out of thin air and
gives it to the government to spend in
exchange for Government debt (i.e.
IOU’s).
Not only that, but through the process
of fractional reserve banking private
banks use the Central Bank’s “new
money” as the basis for increasing the
money supply by an additional 1,000%
(10X) through private lending.
Adding insult to injury, not only does
the current system multiply the
inflationary impact of government
deficit spending (10X as much as if the
government had simply been honest
and printed the money itself), but it
also requires the government to levy
additional taxes on our children to
“repay” the principal and interest on
the original “loan”.
The fact is, if the government cut out
the middleman and used seignorage
(i.e. the government’s power to levy an
indirect tax on its citizens by simply
printing more money) we would all be
much better off (at the expense of the
bankers).
[/b]

@rhymz
Wow. Mehn, You are very intelligient indeed. What you said makes a whole lot of sense. Inflation seems inevitable, but our way of doing things adds debt to that inflation. Why be saddled with both? In that sense, printing more money and worrying about just inflation seems like the lesser of two evils. Did I read you right? Let me know please. This stuff has just started to interest me, wow.

We all have great vision for Nigeria, we are all crying and shouting for change, yet no body want to do anything about it because of the fear of death (who won die when we know say e go beta)   that is the good-will message of every suffering Nigerian to his neighbor, friend and co. e go better, when will it get better, is it when we are all dead, or when every Nigerian will leave the country and become refugee in another man's country, paying heavy bills, anything you do, you will pay a heavy bill and if you misbehave, you will be highly maltreated, na that time e go beta?

Common people, its high time we take back our country, i keep on wondering if our leaders sees this good things abroad whenever they travel, the good roads, superb infrastructures, 24hrs electricity supply and lots of stuffs, do they see them and after seeing them, they come back home and drive their big cars on the bad road and don't care, is there really a country called NIGERIA or we are just different people living in a place, making money and not caring about each other.

Its high time we stop complaining and stand up for what we know as human that is right, it is not right for a police man to arrest you for no reason, i mean for no just reason, you can be walking home after a long day at the office and spending another four hours on traffic in a hot bus or cab and when you finally got to your street and walking home, you can be arrested for wandering, pay 5k the next day for bailout fee and they will put a big sign on the wall which reads "BAIL IS FREE" POLICE IS YOUR FRIEND"

Its time we stop complaining and start acting, its time to save NIGERIA and if we can not, its time to DIVIDE IT, your call.

It doesn't make financial sense for our government to clean up our country. The monetary aid our countries in Africa get from G8 countries etc, will cease. If we become a developed nation, Aid will stop coming to Africa and instead be sent to truly poor countries.

Those in charge of our country cannot benefit if we stop getting this money. When governors and senators return to Africa after holding meetings abroad in some of the most beautiful places on earth; they step back into their air-conditioned mansions. They cannot empathise with the rest of us who are not eating the money with them.

ravenesque:

It doesn't make financial sense for our government to clean up our country. The monetary aid our countries in Africa get from G8 countries etc, will cease. If we become a developed nation, Aid will stop coming to Africa and instead be sent to truly poor countries.

Those in charge of our country cannot benefit if we stop getting this money. When governors and senators return to Africa after holding meetings abroad in some of the most beautiful places on earth; they step back into their air-conditioned mansions. They cannot empathise with the rest of us who are not eating the money with them.

So what can we the citizens and the rightful owners of the money do abi e go beta?

rhymz:

This explanation completely ignores
the fact that when the government
“borrows” money from the Central
Bank that’s exactly what it does. It
creates the money out of thin air and
gives it to the government to spend in
exchange for Government debt (i.e.
IOU’s).
Not only that, but through the process
of fractional reserve banking private
banks use the Central Bank’s “new
money” as the basis for increasing the
money supply by an additional 1,000%
(10X) through private lending.
Adding insult to injury, not only does
the current system multiply the
inflationary impact of government
deficit spending (10X as much as if the
government had simply been honest
and printed the money itself), but it
also requires the government to levy
additional taxes on our children to
“repay” the principal and interest on
the original “loan”.
The fact is, if the government cut out
the middleman and used seignorage
(i.e. the government’s power to levy an
indirect tax on its citizens by simply
printing more money) we would all be
much better off (at the expense of the
bankers).

I'm not sure that the bolded part is correct. Usually, when governments borrow money internally, they do so by selling government bonds to the public. The Central Bank may be the institution that facilitates this sale of government bonds - I don't think they create the money out of thin air.

I don't really understand the rest of the post hence my questions below:

How do private banks lay their hands on the Central Bank's "new money"?

What is this "new money"? Do you mean that (based on your description) the Central Bank creates new money to lend to the government and then also creates new money to lend to private banks?

How exactly does private lending increase money supply by 1000%? (My understanding is that private lending increases the velocity of money - the rate at which money changes hands - but doesn't increase the money supply itself.)

Please why can't money be made available for everyone. Inflation or no inflation, people would still buy and sell what they need or need not, so how is it that inflation possess a problem to making money available for everyone.
If you don't have money and there is need for you to do something you will still have to depend on the help of another person to get that money.
So what is the essence of hording money in the bank and people remain poor and wretched its wickedness as far as I am concerned.