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?

I think if you fully consider the implications of the textbook analysis you'll find your answer right there.

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

Prices can only be controlled to a certain extent, and usually for staple commodities like food, rent, or energy, not for every commodity. The forces of demand and supply still determine a range for your price ceiling, so naturally any price ceiling set will reflect the inflation, and will always be adjusted to reflect it. If you set the ceiling too low then business becomes unprofitable and therefore pointless. Price regulation always contends with demand and supply and usually loses.

Price control agencies can only do so much about runaway inflation.

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?

Well, thanks to the inflation brought about by printing so much money, the costs of running the business are also inflated, so the capitalists' capacity to expand their business does not improve just because there is more money in circulation. It is in fact likely worse than it worse pre - inflation.

I am in complete awe of you sir/ma! I hope to meet with you on another fora because I totally fuc k with your level of maturity and intellectualism

DJperdurabo:


It just baffles me the way the average Nigerian thinks as evidenced by the way folks relate, react and postulate ideas on Nairaland.

Someone sat down, exercised his intellectual capacity to think about the various economic issues bedeviling the country and was wondering why a particular theory he believes could work wasn't adopted. Now that man is a THINKER, A SOLUTION PROVIDER.

Considering the fact he understands he may not know all the aspects, twists and turns and implication of his solution, he has come here to Nairaland (a forum fast losing its relevance due to the preponderance of folks like you quoted) to sound out his opinion and hear what other "intellectuals" and "subject experts" he believes resides in the building have to say.

Rather than comment ON the topic intellectually or keep mum if they have nothing to say and LEARN, these children of perdition will always seek to attack the poster, question his sanity, insult his person, his gender, ethnicity,beliefs etc and TOTALLY ignore what the poster was about.

These are the people you say should lead the country, these are your so-called youth who want to wrest power from the current thrives we have as politicians. Let's pray we don't substitute a GREATER evil for a lesser one when folks exemplified by the one you quoted come to positions of power and authority. If Nairaland is to be the measure of how prepared the Nigerian youth is for power and responsibility, then the country is DOOMED!!!

Thanks for your feedback to he/she that posted thinking they know something whereas s/he wallows in repugnant ignorance.

It’s quite interesting that no one has pointed out the huge cost that comes with printing money itself. It’s why Central banks prefer to keep the active money in circulation to avoid additional cost of printing more money.

Add that to the rest of the points others have maid regarding Stagflation and you have your answer.

And no, price control doesn’t work. The incentive for private companies to produce goods and services is ability to maximize profits. If you as a government ‘fix’ a price they can’t go above, they’ll reduce supply via production and with excessive demand due to increased money in circulation, price would have to increase on the black market ( yes there would be a black market for basic goods ).

Cheers

There are 3-kep points we need to look at:

1- Isolationism
America did use this policy at one stage to try and protect its economy from the “world”.

2- The world as a “global village”: so UK election, Ukraine war, something happening in some place called Taiwan and affecting semiconductors etc etc etc suddenly having a huge effect in Nigeria

3- most importantly “trade by barter”:
Groups do come together and trade (technically a means of exchange) goods and services without money (because money”s value is not trusted by them)

My conclusion: printing money helps nobody in the longrun but having something to barter with (productivity) is the top secret in the short, medium and long term!

Sucre6:


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 in Zimbabwe.

When there is stagflation, prices can't be controlled because an individual could monopolies the market take for example when the Dangote refinery is ready, he would be the sole producer of oil in Nigeria, 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 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, the 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 lose it value, you could buy 10 barrels of oil for 1 dollar

This illustration above means, the value of money that the foreign countries pay for 1 barrel of oil when the economy was good, the same amount of money would buy 10 barrels of oil when the economy becomes bad thereby plunging the economy into deeper hyperinflation, most countries won't even buy from Nigeria then, to avoid importing inflation to their country, yes a country could be plunged into inflation by importation from inflation Country.


The solution to solving these is, The CBN to introduce monetary and fiscal policy

Which include Open Market operations, 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 are devaluation of the face value of the currency,

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

you see when a country is in crisis, you don't follow theory. Look at Russia I bet the west used theories to harm them but still their economy is fine. Nigeria needs desperate measures to combat the economic shortfall. Print more money, pay 5m graduates with no job 5m to sort their travels and they should pay back with interest

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.

Who is this uncircumcised Philippine?


Be talking nonsense.

yusfatedeeprof:

LOL, ignorance at its peak.

Give everyone 5m naira and see what you currently buy for 10k turn 1m naira, until you have a truck loaded with money and people will rather steal your shoes.

Money is just paper, it has no real value it's an illusion, just a means of exchange. The value of money lies within what you can buy with it.

I beg to differ. This is whay everyone says. But why is #100 note not the same value as $100 note.

Going by money is just a piece of paper....these two notes in raw form have different values.... I'm not pegging them to what you can buy or not buy.

VlamesIffect:


What are you saying....do you follow world financial or business news at all? Without those policies the whole financial system will be in absolute shambles...

you don't even know this policies that's why you think it's rocket finance and highly placed financial situation.
Let me ask you a simple question. Why do countries borrow when they have money in their reserves.

PNomsule:


Did they make attempt at price control and regulation early in the day?

You can only control what scarce in supply and channeled towards achieving greater objectives but how do control what is already out of control?
There can't be price control or regulations where the supply is more than demand.

I hope you get it.

AbuAeesha:

you don't just accuse him without providing a better solution or explanation to the topic.
that is absurd

I am not providing anything, if he bothered to attend even a basic economics class in secondary school, he wouldn't have brought up that idea at all

Tobijays:
you see when a country is in crisis, you don't follow theory. Look at Russia I bet the west used theories to harm them but still their economy is fine. Nigeria needs desperate measures to combat the economic shortfall. Print more money, pay 5m graduates with no job 5m to sort their travels and they should pay back with interest

You need to be flogged. I swear. Which Russia doesn't follow theory?


I need to use oraimo cord on you

Mckandre:
production

Production by importation? What has he ever produced?

[quote author=RZArecta post=116334929] 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[ But why?]

Op should realize that the value of money is not in the paper.. It's what some one is willing to give you in exchange for labor, and goods..
I don't know more than that.

jumper524:
you don't even know this policies that's why you think it's rocket finance and highly placed financial situation.
Let me ask you a simple question. Why do countries borrow when they have money in their reserves.

To control money supply.

PNomsule:


Largely our Govt is irresponsible, a case in point is the non patronage of our own cars: Innoson, Dangote Peugeot. China took this ISI approach and they are better for it today.

We are still new to it. This is the reason I want continuity of Govt. I believe Buhari may not have done badly in this aspect. Getting someone else will stop all these, we have suffered for 7 years for this, and defeating terrorism will further help us to grow agriculture. Once we can sustain ourselves, prices of products will drop.
For Innoson, I believe they only assemble here.. The main materials are bought from overseas.. The cars are too costly

The most important quality of money is its scarcity. Money must scarce. Printing more to make it available to everyone will lead to devaluation of the currency and that will lead the country into big problem.

Taigaban:
The answer is no, because the cost of printing money is higher than it value. For example you could need like 7million naira to print 5million Naira. So we should use available resources to produce agricultural products for exports to earn foreign currency which will boost the economy and strengthened the Naira. The empty brains who makes up the 'presidency cabal do not have any slight idea of this. We can produce rice to feed the entire west Africa. Imagine China produces Rice in excess.

This is so false, the idea that it costs N7m to print N5m, if you can prove it here, I will recant my words.

Fir emphasis: The Central Bank of Nigeria spent the sum of N58.6 billion to print 2.52 billion Naira notes valued at N1.1 trillion in 2020.

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.

But the USA and other western nations printed cash to sustain their economy but we can’t because they told us it will cause inflation...
I don’t support tinubu ooo..but you see that printing cash idea he brought was the best thing for Nigeria at that time..

PNomsule:
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?

Let me come from the angle of price control.
Let’s assume you give all citizens 5m each and price control for all goods are activated. It will take like 10,000 Nigerians holding 5m each to buy up most lands in nigeria at the rate of 500k per plot assuming price is controlled.
What happens to the millions of people left? Who have 5m at hand and also wishes to have Atleast a plot?
Corruption sets in. Bribing, lobbying starts which results in more money chasing fewer goods …..inflation.
If it is not bread, it will be car, bags of rice and palm oil, Garri etc

Tobijays:
you see when a country is in crisis, you don't follow theory. Look at Russia I bet the west used theories to harm them but still their economy is fine. Nigeria needs desperate measures to combat the economic shortfall. Print more money, pay 5m graduates with no job 5m to sort their travels and they should pay back with interest

This is just wishful thinking...wake up.

CondemnBattery:
Dumb question

How's it a dumb question? When did it become a crime to ask question?

Melonny:

We are still new to it. This is the reason I want continuity of Govt. I believe Buhari may not have done badly in this aspect. Getting someone else will stop all these, we have suffered for 7 years for this, and defeating terrorism will further help us to grow agriculture. Once we can sustain ourselves, prices of products will drop.
For Innoson, I believe they only assemble here.. The main materials are bought from overseas.. The cars are too costly

I see...

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

Nigeria financial problem is caused by looters at all levels. I prefer retrieving and jailing of financial looters than printing more money. Nigeria has enough money in circulation BUT in the hands of looters. Looting remains the foundational problem of Nigeria.

Reasons:
1. Jailing looters will allow for honest living.
2. Jailing looters will allow money to circulate to all.
3. Jailing looters will engender hardwork and integrity.
4. Jailing looters will enhance productivity.
5. Jailing looters will end going abroad for birthday parties.
6. Jailing looters will halt medical tourism.
7. Jailing looters will stop unnecessary importation .
8. jailing looters will encourage local production.
9. Jailing looters will stop hoarding of dollars to hide in abroad banks.
10. Jailing looters will reduce greed and selfishness.
11. Jailing looters will reduce number of students going abroad for education.
12. Jailing looters will reduce demand for foreign currency.
13. Jailing looters will eliminate use of foreign currency for local transactions.
14. Jailing looters will allow our industries to function properly.
15. Jailing looters will stop crude oil theft.
16. Jailing looters will eliminate fuel subsidy scam.
17. Jailing looters will allow government funds for development get to intended users.
18. Just jail any citizen whose source of living can not be verified.
19. Jailing looters will attract foreign investments.
20. Jailing looters will make Naira to have strong value within and without.
21.Jailing looters will make talented citizens have value for their ingenuity.
22. Jailing looters will make government property to be used for government intended purpose and Nigeria will grow..
21. Jailing looters will give assured value for life in Nigeria.

Infact, jailing looters should be the first priority of incoming President of Nigeria 2023. PeterObi/DattiYusuf should take serious note.

Imagine some persons in position of authority will tell us that:
- monkey stole money
-snake swallowed money
-ant ate financial documents
-no revenue from NNPC because of oil theft
- and such other nonsensical talks, and these people are not in jail. What a country!

I de vex because I love Nigeria. I have no other country than Nigeria.

[quote author=Sucre6 post=116335927]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.
[ bro are you telling us what you've praticalised or what you read in textbooks. If it's later please keep your theory. I have seen the professors of political science that failed woefully in politics. We're talking of reality not what you read in bible, quran or economics textbooks.]

Come to think of it,money is just a paper beatufy in an expensive chemical paint,because of this same money we work for 30 days,what this op posted is reasonable if only u can think deeply,let's pretend dollar does not exist,one of the reason we have food shortage that lead to hike in little ones remaining was because of insecurity,what if more money is printed to pay more manpower produce more locally weapon,with this terrorist will be erase more farmers will be employed that means more produce food will be surplus for export with this we will have more forex our naira will have value

You forgot your country imports everything. Will you use the printed naira to import fuel or toothpick?

The printed money is a mere promissory note. The real money is in assets like, foreign exchange earnings, real estate, services, stocks, bonds etc.

The CBN prints money in proportion with the above. Anything short or above will collapse the economy.

These are just beer parlor talks… OP should take one of our Africa country that try such as a case study…

All this mod wey de push this kind talk to front page na dem de Bleep up

I doff my hat for you sir

SeaTrade:
I saw that too,no out of the box thinking.
Just regurgitating things you already stated and claiming analyst.
Pathetic!

I had once thought that instead of borrowing money to service our budgets, why can't CBN print out the money for all projects

Allisgud:
Come to think of it,money is just a paper beatufy in an expensive chemical paint,because of this same money we work for 30 days,what this op posted is reasonable if only u can think deeply,let's pretend dollar does not exist,one of the reason we have food shortage that lead to hike in little ones remaining was because of insecurity,what if more money is printed to pay more manpower produce more locally weapon,with this terrorist will be erase more farmers will be employed that means more produce food will be surplus for export with this we will have more forex our naira will have value

I wonder why people are not seeing it this way?