Manufacture unlimite currency...
India
February 10, 2012 8:18am CST
There are big currency manufecture machines in different countries,so cant the countries manufacture unlimit currency for the sake of the country or do they have the limit and if so whats the reason for that limit if they have no limit than countries like pakistan can improve their economic status by manufacturing unlimited money and can use it for foreign exchange..........................
3 responses
@ivade0000 (225)
• France
5 Jul 12
Well, you can't just keep on printing those money out of nowhere. The very main reason is that the currency rate will drop tremendously if you do so. If something is very rare such as diamond, it will have a high value, whereas for something that you can find anywhere, you will have low value. It is the same case with money, if you keep on printing US dollars, in a few days time, the dollars' value will drop and it will create inflation in the country inside. Inflation is a situation in which the price of all the goods inside the country rises exponentially because of an excessive flow of money in the market. Last time Germany did suffer from this kind of problem because of excessive money. And that is why the European bank refuses to print extra euro for Greece to end its crisis. If ever they start doing so again, euro will no longer have any value in the market and all countries in europe will suffer from inflation. I am staying in France now and that is why I know about it.
@cyclopz (251)
• Sydney, Australia
10 Feb 12
Well the way i understand it is quite simple. Simply speaking, if i own one pizza with ten slices for example and i issue you a share of that pizza say ten percent of my whole pizaa, meaning you are entitled to one slice which i would make a pomissory note for you to claim that pizza. If i had made ten promisory note to ten persons then each person is entitled to one slice of pizza. But if i make twenty promisory notes then each notes value would drop to five percent each. Simple speaking, its like i divided the pizza for twenty persons and the only way for each of those twenty persons to have a share is to further divide one slice in to two making the whole pizza twenty slices all in all but each one would just have a smaller share.
The same thing also happens with money, the more money the country prints the lesser its value would become. That is why countries also need to control how much money they need to print so that the value of their currency wont drop. And just imagine if that happends you would have to pay twenty dollars just for a burger when normally it would just cost two dollars each.
@owlwings (43910)
• Cambridge, England
10 Feb 12
All coins and bills are merely tokens or promises to pay. The more currency that is issued, the less actual value that currency has because the TOTAL amount of currency in circulation can only be the same value as the TOTAL value of the wealth the country owns.
That is a rather simplistic explanation but it is the basis for one of the causes of inflation. In the days when currency was linked to the real value of gold or silver reserves, the above was literally true. Once currency is no longer linked to a gold standard, it is traded in a free market but is still, ultimately, linked to the assets of a particular country.