gebest:
we will not depend on FOREX again since we can produce everything locally and other countries will be begging for our goods and currency just like america infact we will be the richest country in the world.

Economically it doesn't work that way, dis is a lay-man's definition.

Economics works with comparative cost advantage because no nation has all the resources to produce, and you still need forex for a whole lot.

fiizznation:
The simple answer is inflation. The currency notes that we use don't have any intrinsic value, rather the have exchange value. Which means 50naira doesn't mean its value is 50naira but you can exchange it for goods and services. A country like Zimbabwe couldn't understand this simple economics and they went ahead to produce more and more currencies, at the end what still happened? Well even a pen ended up costing thousands of Zimbabwe dollars and a bread was sold for as high as $2million{Zimbabwe dollars}. Their inflation rate rise to about 80 billion percent. Funny.

And everybody in Zimbabwe instantly became a billionaire{ poor billionaires}

What if the United States keep printing dollars

It is commercial banks that create money. Government simply prints the paper as a standard measure of exchange and store of value for the money created by commercial banks.

If government prints paper for which money ( real value) has not been created, then the paper is worthless.

bookface:


Printing money will not always result in inflation. Although it is the conventional wisdom, it is not always the case.

The conventional wisdom is based on the simple equation MV = PY where M is the supply of money, V is the velocity of money, P is prices and Y is the total quantity of goods.

The conventional wisdom that printing money simply increases inflation assumes that if M is increased, all other things being constant, then P should increase.

But all other things shouldn't have to be constant. For example, if printing money leads to more quantity of goods, prices could actually fall.

Furthermore, the argument is nonsense that more money supply equals higher inflation. Everyday a bank creates a loan, it is basically increasing the money supply out of thin air, which may not necessarily lead to inflation.

Finally, think about this...suppose the central bank prints out 10 billion naira notes today, and they leave it in the vault...would it cause inflation?

The answer is no

Suppose, the CBN choose to give the 10 billion notes to just 10 people, would this cause inflation? The answer is no! hence the role of the velocity of money.

And suppose the same CBN prints trillions upon trillions of naira notes and chooses to give every Nigerian 1billion naira note, what do you think will happen? We are talking about making every Nigerian a billionaire here and you are calling only 10 people. Inflation! Inflation!! Inflation!!!

ckmayoca:
Op if u r a farmer and suddenly u jam plenty money, will u farm again? I bet no. So what will happen to the ppl that buys the food from u? Same wit doc, hair dresser, lecturers etc non of em will waanna work again.

Mmm thanks bro. Your answer just open my eye. God bless.

suyamasta:
No no no! If you say it represents individual contribution to wealth you are wrong! the many unemployed youth who are a major part of the population then contribute nothing?

Yea threy contribute nothing to the wealth and GDP of the nation as long as they remain unemployed and generate no wealth.

Empero1:

Yes, inflation will arise when a country prints its currency in excess. However, the sure way to go about it is, for instance a country like ours can master how to print original US currency which is a tender for international transactions besides it has weight advantage against naira. Although, this is a crime, but then that will not cause inflation to us, but be our secret new black gold.

Yeah, North korea tried it

Harmored:
Abi oo hmmn smart question

There is absolutely nothing smart in that question, it's in actual fact very embarassing as a Nigerian graduate to ask such

PentiumPro:


Yea threy contribute nothing to the wealth and GDP of the nation as long as they remain unemployed and generate no wealth.

They contribute a lot to Nigerias GDP, They contribute specifically to market availability, without them most producers will sell less and make less profit!
There is nothing wrong with government printing money for the unemployed to use in starting productive businesses!

This is why we should return to gold standard. We don't have money in our today's world, what we have is currency.

What is money? All these features comes to mind; portability, durability, fungibility, acceptability except - Store of value.

When we say store of value it simply means it can be stored for a very long time and still purchase the same commodity/service it will purchase today.

Your currency is not backed by anything it is simply a promissory note issued by your govt there by leading to more excessive spending which ultimately leads to deficit spending.

When you hear terms like bail-outs, quantitative easing all these terms simply means the govt is printing more money.

With all of John D. Rockefeller's wealth he wasn't called a billionaire in his time. But today billionaires are almost in every state in Nigeria. This is not because they are more successful than Rockefeller it's just that there is more money in circulation than in Rockefeller's era.

Don't be surprised if future generations have trillionaires. This is just simply having more and more money in circulation.

Do you know that even the American dollar is a fiat currency? This means it also loses its value over time.

In conclusion we have to return to real money which is gold and silver.

You need to take an economics course to understand better.

Georgry:
Hello Nairalanders....

Knowing fully that a country have the right to print money as much as they desire,and their is no limit to the quantity of money a country can print, this question comes to my mind:

Why can't a country just keep printing money to the stage that it will be enough for every body in the country to be rich...


Economist in the house your explanation is needed here.....

best thing is just gather enough money to buy an
island ... buy it ..start printing your own currency there be the president ... bring people to the island form a republic .. and enjoy your money in the country shikena

gebest:
u are a dollard, did u even read d question by the OP

Georgry:
Hello Nairalanders....

Knowing fully that a country have the right to print money as much as they desire,and their is no limit to the quantity of money a country can print, this question comes to my mind:

Why can't a country just keep printing money to the stage that it will be enough for every body in the country to be rich...


Economist in the house your explanation is needed here.....

best thing is just gather enough money to buy an
island ... buy it ..start printing your own currency there be the president ... bring people to the island form a republic .. and enjoy your money in the country shikena

moshino:


You don't need an ECONOMIST to explain that to you, you only need a JSS student who listened in class and read their economics book to explain it to you.

No, you actually need an economist because everyone that explained here has failed.

suyamasta:
It was not money printing that caused zimbabwes financial mess, its a lot deeper than that, just look at the Naira now CBN did not print too much yet we have witnessed higher inflation between january and now!

Due to weight of western sanction and the government's expropriation of farmlands from experienced white farmer, Zim's agric base collapsed. However it maintain the huge volume of money in circulation because it wouldn't own up to the fact that the country is poorer.

The consequent effect, is a lot of money pursuing few goods, making the money less valuable and pushing prices up.

suyamasta:
This can be done in a targetted manner! the cost of printing money is lesser than the value of money, the only problem is the fear of inflation! For example the government can print 1 trillion naira and specifically direct that amount towards payment of salaries and loans to productive sectors! in so doing money is paid for work done! thereby stimulating productivity!
So its a good economic practice if properly done! US did something similar and the ECB is doing something similar as well!
So if Baba Emefiele and co can do something similar with an excellent approach then unemployment can be drastically reduced!

So why can't we just do that. For example, print money for the sole purpose of fighting insurgency rather than going to China to borrow 2 billion dollars?

Before money was introduced we had Trade by Barter. You use money to buy what YOU DO NOT HAVE. When everyone has money, who would produce what you do not have, hence, money becomes useless. Accountant uses his book keeping and accounting knowledge (service) to earn income and same goes with every one. If money becomes free, no one will be willing to produce and how do you even earn foreign exchange to import.

@PentiumPro ithe forum is a mixed audience and you need to permit people you are in more aware of to ask questions.

Talking out debt monetization and printing money and the effects.

In what is called QQE Qualitative Quantitative Easing any nation can print and regulate the funds into the economy,we've seen these applied in modern times although with no thorough proof it works in the long run,i reteirate that since whatever Nigeria makes as a nation for example,she uses 95% of her earnings on importation printing of currency will do us good because in the end we need to review the balance sheet and make sure the spreadsheet balances...To solve the present economic woes i've said time and time again Niegria runs on a monthly economic deficit of $3bn monthly.Now what we need to do is encourage production to satisfy our local consumption to pull down the effect of importation first and secondly try to become a net exporter to the tune of $3bn if we cancel out import levies by our export gains we will be safe but if we keep printing local currencies and with high importation,it shrinks back to the same thing because we have very low foreign exchange earner..


So 1. produce to satsify the local market
2. Expand productiivity to ECOWAS region to increase our earnings.
3. Increase our foreign earnings...It's not hard ( give incentives so Nigerians abroad can work and trasnfer money back home - But with the fraud in the NSE and the corrupt stock market that is yet to be re-strategized,Nigerians won't send money home ) - Tons of people lost millions of dollars in the 2007-2009 window with the fraudulent and manipulative-prone stock exchange market


4. Employ me and i'll teach any state how to come out of debt.
I've done my private lessons name it Osun Ekiti i need states with very bad economy i will run it live for 8years i won't even collect FEdeal allocation for more than a year...We've got the template as the new generation...

Thank you all, I've really learnt a lot from you guys here.

suyamasta:
They contribute a lot to Nigerias GDP, They contribute specifically to market availability, without them most producers will sell less and make less profit!
There is nothing wrong with government printing money for the unemployed to use in starting productive businesses!

Oh goodness me! Did you actually meant that?

They don't contribute nothing, the money they spend is the wealth created by others, like parents, brothers and sisters, they are just beneficiary of other people wealth,
How would it look if ALL Nigerians sit at home without employment and the govt print money and just hand 1M notes to each of us?

I have it on good authority that adolf Hitler did something similar when he came into power to stop the recession. The difference was that every single person was put to work and d money was regulated.

Besides, I wonder why government can't print money and use it to import special goods and services(weapons,jets etc). it won't cause inflation because the money is not being spent in Nigeria yet those goods are basically free.

theEYe21:
See this olodo!

It is not olodo... it is the mind of a lazy man speaking, quite dangerous mentality if you ask me.

gebest:
u are a dollard did u even read d question by the OP

The actual spelling is dullard.

I quoted you base on your explanations, and the last time i checked, nations don't produce anyhow, so Nigeria can't be automatically rich cos of excess production.

you shld have a buyer for your goods and services and there is always a quota of what goes in and out of countries.

Read ur economics text book.

Inflation is well understood.. But i have a question.. What if the money printed are used for infrastructures/ Technology/Arms and so on without actually giving it to the public in terms of gift or load. Wouldnt that make sense and if not why?

Pheals:
print watin .... Go back to history the illiterate abacha keep printing money when no country get crude oil from us ... He dey print amh pack go house ..what end it ? .... We can print it but the feature is " it must be scarce " so that it can have value. Op u understand now

it seems you believe everything u read. Abacha that kept the naira at N60 to dollar for many years is d one you are accusing.

PentiumPro:


Oh goodness me! Did you actually meant that?

They didn't contrubute nothing, they money they spend is the wealth created by others, like parents, brothers and sisters, they are just beneficiary of other people wealth,
How would it look if ALL Nigerians sit at home without employment and the govt print money and just hand 1M notes to each of us?

Was there any human born with money in his/her hand? Have you read how Dangote was helped by his uncle with a loan which he used and paid back now the richest black man? I did not say CBN should print money for all Nigerians! The point i am making is Printed money can be channelled toward productive activities/industries which creates meaningful employment, this can be done successfully if the CBN takes care to know the right amount of money to print to avoid oversupply!

Pheals:
print watin .... Go back to history the illiterate abacha keep printing money when no country get crude oil from us ... He dey print amh pack go house ..what end it ? .... We can print it but the feature is " it must be scarce " so that it can have value. Op u understand now

Must you insult someone's father before explaining simple economic concept? Hope you are not undergraduate, because no any school will accept you as a teacher. Pity.

Go and read about Mansa Musa and Egypt.

Think of it this way. If money were to grow on trees, it'll be as valuable as leaves.

The amount of money in circulation in the economy has to be controlled.Too much money in circulation could cause devaluation of the currency.

sarzy:



So why can't we just do that. For example, print money for the sole purpose of fighting insurgency rather than going to China to borrow 2 billion dollars?

Our old economic theory didnt recognise this possibility untill US and China did something similar, its a new concept! The most important area where Printed money can be utilized without creating problems is in the domestic front to avoid strain on fx, for example payment of salaries, creating loans/social development projects and building infrastructures like roads and bridges which all dont depend too much on purchase of foreign currency! with this there has to be serious calculation to avoid oversupply!
If Baba Emefiele can take a look at this we are sure to reduce unemployment and increase productivity

fiizznation:
And suppose the same CBN prints trillions upon trillions of naira notes and chooses to give every Nigerian 1billion naira note, what do you think will happen? We are talking about making every Nigerian a billionaire here and you are calling only 10 people. Inflation! Inflation!! Inflation!!!

You are missing the point. My explanation is that yes, printing money to make every Nigeria a billionaire will cause hyperinflation....but printing money will not always equal inflation. Two different things.