Irish Central Bank IS printing money (Euro51Bn so far)
Discussion
ringram said:
No need to repay if the money is just created from thin air. In the same way the UK and US can just print money to pay interest or payments on bonds etc
Who cares as long as the purchasing power of the currency is maintained, give or take a bit.
Were you in the Treasury, circa 1997-2010?Who cares as long as the purchasing power of the currency is maintained, give or take a bit.
My knowledge on how world finances work is (very) limited......but how is a country's wealth defined?
Is it purely by the value of its currency (compared to the USD) and how much of that currency is 'registered' within that particular country's border?
(I'm guessing it is probably hugely more complex than that...but is the above a basic 'start point'?)
Is it purely by the value of its currency (compared to the USD) and how much of that currency is 'registered' within that particular country's border?
(I'm guessing it is probably hugely more complex than that...but is the above a basic 'start point'?)
AJI said:
My knowledge on how world finances work is (very) limited......but how is a country's wealth defined?
Is it purely by the value of its currency (compared to the USD) and how much of that currency is 'registered' within that particular country's border?
(I'm guessing it is probably hugely more complex than that...but is the above a basic 'start point'?)
Generally speaking people look at a country's annual economic output (Gross Domestic Product) to determine a country's wealth production and this is conventionally translated into one currency to compare against another country's GDP (normally the currency of the country where the comparison is taking place, or the USD). So any printing of money will reduce the exchange rate and leave the overall comparison the same before and after the printing.Is it purely by the value of its currency (compared to the USD) and how much of that currency is 'registered' within that particular country's border?
(I'm guessing it is probably hugely more complex than that...but is the above a basic 'start point'?)
Edited by youngsyr on Thursday 20th January 10:14
Can someone answer a fairly simple question for me?
Why or what stops a country just printing more and more money? Is it because it just adds to inflation and everything becomes more expensive in that the numeration value becomes more and more worthless as more money comes into circulation?
So if I'm right in understanding it, Ireland doing this is a bad thing all round? Especially as it's the Euro, and not consigned to their own country as, say, the pound is?
Why or what stops a country just printing more and more money? Is it because it just adds to inflation and everything becomes more expensive in that the numeration value becomes more and more worthless as more money comes into circulation?
So if I'm right in understanding it, Ireland doing this is a bad thing all round? Especially as it's the Euro, and not consigned to their own country as, say, the pound is?
neil_bolton said:
Can someone answer a fairly simple question for me?
Why or what stops a country just printing more and more money? Is it because it just adds to inflation and everything becomes more expensive in that the numeration value becomes more and more worthless as more money comes into circulation?
So if I'm right in understanding it, Ireland doing this is a bad thing all round? Especially as it's the Euro, and not consigned to their own country as, say, the pound is?
Take a look at Zimbabwe, that's a pretty good example of what happens when a government continually prints more money.Why or what stops a country just printing more and more money? Is it because it just adds to inflation and everything becomes more expensive in that the numeration value becomes more and more worthless as more money comes into circulation?
So if I'm right in understanding it, Ireland doing this is a bad thing all round? Especially as it's the Euro, and not consigned to their own country as, say, the pound is?
fido said:
ringram said:
Who cares as long as the purchasing power of the currency is maintained, give or take a bit.
Erm, by definiton, printing money erodes purchasing power. So long as you don't mind another 5 ot 10p on a litre of petrol every year it's tickety boo.My statement stands, the money supply can change either up or down to manage price levels. That exactly what central bank bond purchases and sales are meant to achieve. Who cares if they issue unfunded currency as long as price levels are maintained.
ringram said:
fido said:
ringram said:
Who cares as long as the purchasing power of the currency is maintained, give or take a bit.
Erm, by definiton, printing money erodes purchasing power. So long as you don't mind another 5 ot 10p on a litre of petrol every year it's tickety boo.My statement stands, the money supply can change either up or down to manage price levels. That exactly what central bank bond purchases and sales are meant to achieve. Who cares if they issue unfunded currency as long as price levels are maintained.
So you think the fact that a USD in 1900 is now worth 9c shows that Im wrong!?
No what I said, which nobody is reading for some reason is that it doesnt matter as long as purchasing power is maintained.
Obviously without printing money and backing it by debt the US has still phucked its currency.
So clearly you guys are talking anal juice if you think that printing money automatically creates inflation.
Whats the difference between printing money and running a growing deficit which never gets repaid?
The answer is nothing....
Think about that before spouting off without reading my posts properly.
No what I said, which nobody is reading for some reason is that it doesnt matter as long as purchasing power is maintained.
Obviously without printing money and backing it by debt the US has still phucked its currency.
So clearly you guys are talking anal juice if you think that printing money automatically creates inflation.
Whats the difference between printing money and running a growing deficit which never gets repaid?
The answer is nothing....
Think about that before spouting off without reading my posts properly.
neil_bolton said:
Can someone answer a fairly simple question for me?
Why or what stops a country just printing more and more money? Is it because it just adds to inflation and everything becomes more expensive in that the numeration value becomes more and more worthless as more money comes into circulation?
So if I'm right in understanding it, Ireland doing this is a bad thing all round? Especially as it's the Euro, and not consigned to their own country as, say, the pound is?
Nothing stops a country printing more money any more. In times past we had the gold standard, where all the banknotes had to be backed by gold at the central bank. that was quite easy to understand. These days we have fiat currencies, where the value of the money is based upon the economic competency and prospects of the country.Why or what stops a country just printing more and more money? Is it because it just adds to inflation and everything becomes more expensive in that the numeration value becomes more and more worthless as more money comes into circulation?
So if I'm right in understanding it, Ireland doing this is a bad thing all round? Especially as it's the Euro, and not consigned to their own country as, say, the pound is?
Essentially printing more money doesn't do a whole lot. Granted you might double the amount of currency, but it will eventually be worth half as much. The clever bit is that there's a bit of inertia before it all shakes out, so for a while people and businesses do feel a bit richer when quantitative easing takes place.
The problem is that if Ireland does quantitative easing, the normal release valve of devaluing the currency can't take place because its value is mainly based on Germany and France, which stops quantitative easing from working properly. Basically it just piles debt onto the Irish government, and they already have quite a bit of that.
anonymous said:
[redacted]
And? In effect there is no difference. The USD has dropped from $1 in 1900 to 9c today being backed by debt. In practice its irrelevant.What is important is managing the money supply to retain purchasing power. Ireland is in a deflationary state at present, so printing money now wont cause inflation now... down the line, perhaps. But then as per the graphs above backing the money by debt does not change the facts.
Governments always inflate their way out of debt. How money is created and managed is irrelevant.
Whats important is ensuring that the amount of money, which is M1, M2, Mn... and the multiplier being managed to maintain the purchasing power of the currency. No developed country does this whether the currency is backed by debt or not. Hence its irrelevant whether its backed by debt or not.
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