I am really just curious as to "why can't we just print more money and solve the poverty problem in the country?"

Terms like "inflation" and the "devaluing of the naira" are the usual buzz answers to that question. Also, people give the example that if we were to print more money and just give everyone N5,000,000 for example, then everyone would go out and buy things, thus making "THINGS" more scarce and in short supply and hence driving up the prices of things (simple demand/supply economics). But herein lies the catch for me... With TRUE unemployment rate somewhere around 33% in the country, if DEMAND for "THINGS" rose, then I would think that companies would WANT to hire more people and build more processing plants to keep up with demand and raise their profits. So, the influx of cash (printed money) would seem to solve the unemployment problem.

Again, we have agencies that regulates pricing in the economy: PPPRA, Price Control Board (Ministry of Commerce) etc, with those, can't the likely over pricing of commodities (THINGS) be controlled and gazetted to avoid the story of "too much money chasing fewer goods"?

In the final analysis, a robust and health competitive economy would have been created and underemployment issues largely solved.

Economists and Analysts lets discuss?

After election...

Bros in a financial analyst and I've always maintained this perspective.
Many financial policy are not real, they are all artificial and several factors make them happen.
Printing more money knowingly leads to artificial inflation but secretly still maintains the economic situation.

Modified: a simple question to all those relegated minds calling me fools. Those who don't have the balls to question status quo.

1, Why do countries borrow when they have money in their external reserves.

2, if countries like USA, CHINA, UK e. t. c are the top debtors in the world, which countries come dey borrow them the money?

Ever asked yourself why can't cbn print more naira and sell our crude oil in Naira so Europeans can source for our local currency.

You cant just start printing money smh

This was Tinubu's solution during coronavirus

no wonder oir economy is like this

jumper524:
Bros in a financial analyst and I've always maintained this perspective.
Many financial policy are not real, they are all artificial and several factors make them happen.
Printing more money knowingly leads to artificial inflation but secretly still maintains the economic situation.

you're not a financial analyst oga, stop lying and even if you insist you are then you're obviously very terrible at your job and I'll advise every sane person to run away from you

Money money money

I've read this line before, hope they are not trying to make it seem logical or point of discussion? BTW who is the writer supporting in this election? It will enable me draw conclusion. The point raised sounds familiar. Lolz

Not technically the best option to solve inflation and it would cause more inflation because there would be too much money in circulation chasing fewer goods. This tends to weaken the value of the currency till one loaf of bread could be sold for one million, a text book example of what happened in Zimbabwe some years back.

Zimbabwe kept printing more money to cushion inflation and kept introducing new currency face value until they had one million note face value. It ended in chaos, poverty and protest for a regime change.

So, what you should understand is money management is key factor to stimulating and running the country's economy, when you ruin that by printing more money, you tend to ruin the country itself.

What CBN does to tackle inflation is raise interest rates to discourage banks from lending out the money that creates new money in the system. As every loan in the system creates new money.

As an economist let me make this as clear as possible in lay man terms

Printing more money will lead to what is called money illusion when huge amount of money is chasing little amount of goods/services.

Printing more money will make the money valueless, which will plunge the country into deep stagflation, which is high unemployment and inflation join together.

Countries that their money has money value than ours would not invest in the economy.

Prices of things will skyrocket like mad, imagine having ten million naira and a price of big loaf of bread is one million naira, u end up spending ten million naira just to feed for 3 days.

With the ridiculous way the value of the money would be the country can't even import anything which will lead to more poverty, even the so call rich men and women would eventually run out of money to spend.

It's a scary situation, during covid 19, tinubu suggested that government should just print more money, I read the news and laughed at his nonchalant statement, which clearly shows that he understands nothing in money generation or managing the resources of the nation, reason why I will vote for Peter obi, not out of sentiment but out of the fact that he understands the uniqueness of Nigeria situation and knows how to economically tackle it.

Willy7:
I've read this line before, hope they are not trying to make it seem logical or point of discussion? BTW who is the writer supporting in this election? It will enable me draw conclusion. The point raised sounds familiar. Lolz

Lolz my brother @ willy7 ...

Truth is, I don't even have a favourite amongst the 3 likely contenders, Amaechi would have been my preferred choice.

Nice topic OP. Financial analysts, economists oya food don land oh. Mods fp please.

A305:
Not technically the best option to solve inflation and it would cause more inflation because there would be too much money in circulation chasing fewer goods. This tends to weaken the value of the currency till one loaf of bread could be sold for one million, a text book example of what happened in Zimbabwe some years back.

Zimbabwe kept printing more money to cushion inflation and kept introducing new currency face value until they had one million note face value. It ended in chaos, poverty and protest for a regime change.

So, what you should understand is money management is key factor to stimulating and running the country's economy, when you ruin that by printing more money, you tend to ruin the country itself.

What CBN does to tackle inflation is raise interest rates to discourage banks from lending out the money that creates new money in the system. As every loan in the system creates new money.

I fancy the points you noted however, from the post I made, how do you see the aspect of Price Control Mechanism as a critical vehicle to combat and stiffle inflation before it rears its ugly head, say on bread for example?

Sucre6:
As an economist let me make this as clear as possible in lay man terms

Printing more money will lead to what is called money illusion when huge amount of money is chasing little amount of goods/services.

Printing more money will make the money valueless, which will plunge the country into deep stagflation, which is high unemployment and inflation join together.

Countries that their money has money value than ours would not invest in the economy.

Prices of things will skyrocket like mad, imagine having ten million naira and a price of big loaf of bread is one million naira, u end up spending ten million naira just to feed for 3 days.

With the ridiculous way the value of the money would be the country can't even import anything which will lead to more poverty, even the so call rich men and women would eventually run out of money to spend.

It's a scary situation, during covid 19, tinubu suggested that government should just print more money, I read the news and laughed at his nonchalant statement, which clearly shows that he understands nothing in money generation or managing the resources of the nation, reason why I will vote for Peter obi, not out of sentiment but out of the fact that he understands the uniqueness of Nigeria situation and knows how to economically tackle it.

It appears the responders I'm getting on this issue are plain textbook analysis and not even addressing the issues from the points I posited, especially that the fears you raised, my post envisaged it already?

Can prices be controlled, if not what then is the usefulness of the Pricing Regulatory & Control bodies we have in the country?

What happens to the urgency of Capitalists to get more people employed as to meet rising demands associated naturally from too much money chasing fewer goods?

justicechichex:
Nice topic OP. Financial analysts, economists oya food don land oh. Mods fp please.

My problem is those responding and claiming financial experts are simply regurgitating textbook inflation analysis which I already envisaged in my post.

RZArecta:
you're not a financial analyst oga, stop lying and even if you insist you are then you're obviously very terrible at your job and I'll advise every sane person to run away from you

PNomsule:


It appears the responders I'm getting on this issue are plain textbook analysis and not even addressing the issues from the points I posited, especially that the fears you raised, my post envisaged it already?

Can prices be controlled, if not what then is the usefulness of the Pricing Regulatory & Control bodies we have in the country?

What happens to the urgency of Capitalists to get more people employed as to meet rising demands associated naturally from too much money chasing fewer goods?

You see, it's a vicious cycle, take for example, when more people are employed, they will be paid right, what is the value of working when u know that the money you will be paid won't be enough to buy you food to eat not to talk of clothing and luxury, it gets to a point when the money becomes so valueless that there will be no need to work, a case study is Zimbabwe.

When there is stagflation, prices can't be controlled because an individual could monopolies the market take for example, when dangote refinery is ready, he would be a sole producer of oil in Nigeria, when when stagflation sets in, you can't control or regulate how he sales his product because the whole country is dependent on him for survival, it's will be wild like going back to stone ages.
Now this is a practical example

Take for instance if our normal exchange rate is maybe #1,000 to 1$ dollar and a crude of oil is sold at #100,000 these foreign countries would have to exchange $10 dollars just to acquire one barrel of oil, but when stagflation sets in, exchange rate would be crazy, say N100,000 for $1 dollar and a barrel of oil is sold at 100,000 to foreign export for example, when stagflation sets in and the naira looses it value, you could buy 10 barrels of oil for $1 dollar

These illustration above means, the value of money that the foreign countries pays for 1 barrel of oil when the economy was good, same amount of money would buy 10 barrels of oil when the economy becomes bad thereby plunging the economy into deeper hyper inflation, most countries wont even buy from Nigeria then, to avoid importing inflation to their country, yes a country could be plunge into inflation by importation from inflation Country.


The solution to solving these, The CBN introduces monetary and fiscal policy

Which include Open Market operation, sales of bonds and securities and so on, they do this to rake in excess money in circulation, and when this is continued the money in the economy would be just fine to run the economy. The extreme measures is devaluation of the face value of the currency,

So that's it, hope it's clearer now?

PNomsule:


I fancy the points you noted however, from the post I made, how do you see the aspect of Price Control Mechanism as a critical vehicle to combat and stiffle inflation before it rears its ugly head, say on bread for example?

In this life; there are some forces you can't control.

Think of: The force of gravity, The speed of light, The doppler effect of soundwave so also, The forces of demand and supply in economics.

Price control mechanism will only work in a socialism or communism economy NOT a capitalist economy where everything is geared towards profit making.

It can also work when a cartel of buyers tends to make it work — this is a scenario whereby the G7 are recently talking about putting price cap on Russia oil but sadly it will never work because Russia will decide not to sell to them and instead move their market to Asia and East Asia.


Why?

The forces of demand and supply can hardly be influenced.

A305:
In this life; there are some forces you can't control.

Think of: The force of gravity, The speed of light, The doppler effect of soundwave so also, The forces of demand and supply in economics.

Price control mechanism will only work in a socialism or communism economy NOT a capitalist economy where everything is geared towards profit making.

It can also work when a cartel of buyers tends to make it work — this is a scenario whereby the G7 are recently talking about putting price cap on Russia oil but sadly it will never work because Russia will decide not to sell to them and instead move their market to Asia and East Asia.


Why?

The forces of demand and supply can hardly be influenced.

I think you're easy to relate with, you argue with sound perspective and broad knowledge base, I must acknowledge that.

Back to our discuss and importantly, a situation where Govt have to print more money and share is an aspect of a mixed economic system that combines aspects of both capitalism and socialism. What a mixed economic system does is it protects private property and allows a level of economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims. Hence I maintain that prices could be controlled.

(you will agree with me that in contrived circumstances, gravity can be felt less e.g Astronauts space travel.)

Again, if more people are employed, it means supply will increase relative to demand and the aspect of "too much money chasing fewer goods" diminished. Don't you think bruv?

The CBN cannot print more money because we don't want to end up like Zimbabwe and Venezuela.

More money in circulation=higher purchasing power which in turn leads to high prices of goods and services.
Personally i believe all monetary policies are put in place to ensure the poor masses remain poorer.

Nigeria has spoilt beyond repair
It can never be better again
The best thing is for everyone of us to find our square roots
And if there is no means to japa
We should continue living and resign to faith

Op, you must be an Agbadorian!

Lol. Let me explain it this way. Money is just a piece of paper, it is literally just a piece of paper. What makes money important is actually what that money can buy itself and not the money at hand. Now imagine if a bag of beans is Valued at 50,000 naira. And you just keep on printing money and handing it over to everyone, what happens when the money in circulation outweighs the beans in circulation? It just becomes useless or the price of that beans will skyrocket up and your money looses its value. If you keep printing more, the beans will either eventually run out or the price of that beans will sky rocket till your money becomes useless in value. So the solution isn’t printing more money because it will just mean something everyone can have, and if everyone can have that, then consumption will outweigh production, and something must fund that production. That being said, don’t be fooled, governments print money steady, that’s how they steal and embezzle and become rich. If you just don’t print, the population of those in existence will outweigh the money in circulation and your country will just collapse. What Nigeria is facing is that we don’t fund the right things in this country to generate production, we rely so much on importation and we have corrupt leaders stealing these money meant to be in circulation.

Ok

They print more Naira or not, the fact still remains that i must make money no matter what.

Hustle No Dey Finish.

That cannot solve poverty in a country, or do you want what that happened in Zimbabwe to also play out in Nigeria?

A

Dumb question