Ill probably get laughed off the boards for asking this but....

BengaLover · 06-10-2010 05:24PM #1

Why cant the exchecker or mint or whatever, just print out loadsa money and plough it into paying off our debt?
Serious question, im not taking the mick honest!
Was discussing it with the kids earlier and none of us could figure out the answer.

Amhran Nua · 06-10-2010 05:26PM

We don't print our own money. And if we did and tried that, we'd end up like Zimbabwe with runaway inflation, fifty pounds for a loaf of bread.

Iron Hide · 06-10-2010 05:27PM

Printing more money devalues it. Money still has to be earned and/or borrowed to keep its value.

TheInquisitor · 06-10-2010 05:28PM

It would lead to rapid inflation, which in turn would devalue the money you have now meaning it would be much more expensive to buy products and so the cycle would continue. Look at Zimbabwe, they did exactly what you are talking about and ended up with a 100 trillion dollar note at the end of it!

BengaLover · 06-10-2010 05:28PM

we dont print our own money???
Where does it come from then?

jmayo · 06-10-2010 05:30PM

BengaLover wrote: »

we dont print our own money???
Where does it come from then?

You do know we are in the Euro ?
We are part of the Signle Currency and don't decide the direction of the Euro.
We have to play ball with 15 other members.

http://en.wikipedia.org/wiki/Euro

Back in thedays of the PUNT we could have rmaped up the presses and hey presto it would be 100 pounds for a loaf of bread.

Soby · 06-10-2010 05:31PM

Its a fair enough question.But basically if you doubled the amount of money in the economy, prices would double. What we need to do is produce more goods more efficiently, as it lowers the price of goods basically

..Basically money is only valuable because its scarce. Think of it this way. If gold and diamonds where something that was found all over the world do you think it would have the same value?

dvpower · 06-10-2010 05:32PM

BengaLover wrote: »

Why cant the exchecker or mint or whatever, just print out loadsa money and plough it into paying off our debt?

Good idea. Now all we need to do is convince our creditors to take worthless paper in lieu of hard cash.

Iron Hide · 06-10-2010 05:33PM

Some countries mint their own Euro notes & coins, AFAIK we get ours from the ECB in Frankfurt

Einhard · 06-10-2010 05:36PM

BengaLover wrote: »

we dont print our own money???
Where does it come from then?

Money has to be backed up by something of real value. It's not the note or the coin that allows you to buy the loaf of bread, but what it represents. And if the ration between the two, the actual hard currency and whatever is backing it and providing its value, then the notes and coins depreciate in value, to the point of becoming worthless. In Weimar Germany, it was not unknown for people to paper their walls with notes because they were of less value than an actual tin of paint, or normal wall paper.

DeVore · 06-10-2010 05:36PM

If we were to just start up the printing presses the other 14 Euro countries *might* just have a thing or two to say about it

However.... "Quantitative Easing".... *cough*.... I've said too much.

DeV.

DeVore · 06-10-2010 05:38PM

Einhard wrote: »

Money has to be backed up by something of real value. It's not the note or the coin that allows you to buy the loaf of bread, but what it represents. And if the ration between the two, the actual hard currency and whatever is backing it and providing its value, then the notes and coins depreciate in value, to the point of becoming worthless. In Weimar Germany, it was not unknown for people to paper their walls with notes because they were of less value than an actual tin of paint, or normal wall paper.

And modern currencies are back by ..... what?

(and please don't say Gold Standard, pretty pleeeeease....).

The ugly truth is that currency is backed up by the shared belief that OTHER people will value it as much as you do and that it will continue to be "legal tender" when it comes to the time for you to use it to buy things. When that "shared belief" withers.... bad things happen.

DeV.

Einhard · 06-10-2010 05:50PM

DeVore wrote: »

And modern currencies are back by ..... what?

(and please don't say Gold Standard, pretty pleeeeease....).

The ugly truth is that currency is backed up by the shared belief that OTHER people will value it as much as you do and that it will continue to be "legal tender" when it comes to the time for you to use it to buy things. When that "shared belief" withers.... bad things happen.

DeV.

Exactly. It's backed by something of real value. I obviously didn't mean that there's trillions hidden away in some vault somewhere backing every coin and note in circulation. Perhaps I should have explained it better.

Still, I liked my little Weimar anecdote!!:D

Wolfe Tone · 06-10-2010 05:52PM

What if we do it in the dead of night.... and not tell anyone? haha

Économiste Monétaire · 06-10-2010 05:52PM

The short answer to your question is 'no'. Currency is printed based on a pooled process, with individual national central banks being assigned responsibility for specific Euro notes. For example, the currency centre in Sandyford prints €10 notes, along with 5 other Euro area member states for this year. The ECB itself doesn't print currency, but the overall amount to be printed is set by the Governing Council of the ECB.

Amhran Nua · 06-10-2010 07:02PM

DeVore wrote: »

The ugly truth is that currency is backed up by the shared belief that OTHER people will value it as much as you do and that it will continue to be "legal tender" when it comes to the time for you to use it to buy things. When that "shared belief" withers.... bad things happen

It needs as much belief as any other law, with similar consequences if you "stop believing" in it.

DeVore · 06-10-2010 07:28PM

How so....if I stop believing in "murder" as a crime.... its not quite the same thing.

DeV.

Mr Benevolent · 06-10-2010 07:41PM

DeVore wrote: »

How so....if I stop believing in "murder" as a crime.... its not quite the same thing.

DeV.

In terms of social consequences it's exactly the same thing.

Anita Blow · 06-10-2010 07:48PM

In the easiest way to explain it (for me anyway),
the total money supply is like a big cake. Let's say a 1 kilogram cake. There will always be one 1KG of the cake, no matter how many slices you cut. So we can have 4 big slices (The current amount of money with high value) or you can cute each slice to make 8 slices. Yes there'll be 8 slices, but they'll smaller (Like increasing the slices of the cake you cut and making them smaller, if you increase the amount of money in circulation, each euro will have less value)

Yitzhak Rabin · 06-10-2010 08:04PM

DeVore wrote: »

How so....if I stop believing in "murder" as a crime.... its not quite the same thing.

DeV.

Kind of is.

If one person believes money is worthless, it doesn't really matter. If everyone does, then its a problem.

If one person believes murder is ok, it doesn't matter, you just got to lock him up.

If everyone thinks murder is ok, then it is. Although, this is kind of getting into philosophy and objective morality, etc.

Amhran Nua · 06-10-2010 08:05PM

DeVore wrote: »

How so....if I stop believing in "murder" as a crime.... its not quite the same thing.

DeV.

You are legally required to accept legal tender for debts, if you pursue the debts beyond that you will be dissuaded by the courts. If you start printing your own legal tender, you will be imprisoned. It's backed by the government's ability to raise capital as a representation of value by taxation or, as the case may be, borrowing. An unwillingness to believe in it doesn't mean you can choose to only accept gold coins for work you do.

Ash.J.Williams · 06-10-2010 08:13PM

Économiste Monétaire wrote: »

The short answer to your question is 'no'. Currency is printed based on a pooled process, with individual national central banks being assigned responsibility for specific Euro notes. For example, the currency centre in Sandyford prints €10 notes, along with 5 other Euro area member states for this year. The ECB itself doesn't print currency, but the overall amount to be printed is set by the Governing Council of the ECB.

So the government could have another Iodine pack sent out to us and bang a few tenners in on the sly?

BengaLover · 06-10-2010 09:33PM

Well! How interesting and my question answered really, thanks!
Although I do believe there are other great ways the government could get lots of money instead of penalising citizens, I suppose thats a whole thread in intself.. And probably been posted here at least once a week too.:)

dunsandin · 06-10-2010 09:57PM

Einhard wrote: »

Money has to be backed up by something of real value. It's not the note or the coin that allows you to buy the loaf of bread, but what it represents. And if the ration between the two, the actual hard currency and whatever is backing it and providing its value, then the notes and coins depreciate in value, to the point of becoming worthless. In Weimar Germany, it was not unknown for people to paper their walls with notes because they were of less value than an actual tin of paint, or normal wall paper.

Sadly, that idea went out with the gold standard. Money currently is backed up by that nebulous concept of "Credibility" and we are running a defecit in that commodity at this stage. If we can up our output of "credibility", our problems will evaporate. Sadly, "credibility" is in short supply, and unless we can tap a vein in Michael O'Learys arm and start bottling it, it will remain so.

Dirk Gently · 06-10-2010 10:46PM

how ironic that such an innocent question has so much relevance.

You dont have to go to the trouble of printing lots of money backed by nothing to cause a disaster, you just have to invent it from thin air and transfer pixels across the globe electronically. Same deal, it's backed up by SFA in reality.

Now we have to (allegedly) , produce real wealth to repay the invented debt. We can all see the pitfalls in printing money and flooding the country with it but yet we are all locked into a process which is doing exactly the same thing as if we did already print the money backed up by nothing (which globally we did already do). To what end do we do this?, except to save the very corrupt system which should have been let die when it's model failed spectacularly.

I think the OP's question is brilliant in it's simplicity. We need to be asking more very basic, very innocent questions like that if we ever want to understand and make sure this situation never happens again. We worry too much about bondholders and hedge funds and how we pay back all our debt, and not enough about the basic system which allowed this to happen and which we are killing ourselves to preserve.

jimmycrackcorm · 06-10-2010 11:29PM

We could just mint our own currency to pay social welfare and public servants... then we could afford to give them as many raises as they clamour for -

PCPhoto · 06-10-2010 11:37PM

why not pass out the ould notes (punts) on the sly.... and get people to bring them into central bank to "convert"

hee hee - we'd be creating money from a source which is technically legal (the original punt)

McDougal · 07-10-2010 12:14AM

BengaLover wrote: »

Why cant the exchecker or mint or whatever, just print out loadsa money and plough it into paying off our debt?
Serious question, im not taking the mick honest!
Was discussing it with the kids earlier and none of us could figure out the answer.

The European Central Bank would never allow it. They control our currency.

Cookie_Monster · 07-10-2010 07:32AM

Soby wrote: »

Its a fair enough question.But basically if you doubled the amount of money in the economy, prices would double. What we need to do is produce more goods more efficiently, as it lowers the price of goods basically ..Basically money is only valuable because its scarce. Think of it this way. If gold and diamonds where something that was found all over the world do you think it would have the same value?

hah the funny thing is diamond should be worthless. my partner manufactures it, 30c a carrot. it indistinguishable from the real thing yet the diamond cartel won't allow its use for jewellery to keep the prices artificially high. about 90% of real diamond is simply stored away to keep prices up also, biggest con going, the diamond industry.

Cookie_Monster · 07-10-2010 07:34AM

PCPhoto wrote: »

why not pass out the ould notes (punts) on the sly.... and get people to bring them into central bank to "convert"

hee hee - we'd be creating money from a source which is technically legal (the original punt)

have a bail or two of punts "fall off the back of a truck" some where :pac:

krd · 07-10-2010 07:48AM

BengaLover wrote: »

Why cant the exchecker or mint or whatever, just print out loadsa money and plough it into paying off our debt?
Serious question, im not taking the mick honest!
Was discussing it with the kids earlier and none of us could figure out the answer.

We can't print our own money - but we can pull it out of tin air.

Banks actually pull money out of thin air. They lend money they do not have and then ask the mint for the printed notes and they hand these notes out to people they loan to.

It's called fractional reserve banking. They only need to have a fraction of the cash on deposit that they lend out. If they have €1 they can lend €10 - they pull the cash out of thin air.

The Irish government has had to borrow money to pay down the debts incurred by our crap banks - the money they've borrowed has been pulled out of thin air somewhere else. All money is monopoly money. The only thing stopping it from being worthless is people believing it's worth something.

It's hard to get your head around.

Ill probably get laughed off the boards for asking this but....

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