Why is there a limit on how much money can be printed in a Country/Region?



Why is there a limit on how much money can be printed in a Country/Region?

In: Economics

I would guess, inflation? A lot of money = money isn’t worth as much.

Go look up what happened in Zimbabwe when they went nuts printing money.

It’s basic supply and demand. If there’s more supply of money, it’s worth less.

By the way, you don’t print money. You print currency. Currency and money aren’t the same thing.

I not sure that the question is s valid. In the USA the Federal Reserve Bank, a private company that is controlled by the Government acts like a central bank.

They exchange old currency for new, as well as distribute coins. They lend money to other banks as well.

The total amount of money in the entire system is called the M1 money supply. When the Government wants to increase the amount of the M1 supply, the make loans. This does not actually mean that money currency is being created just that the total “value” of the M1 supply increases.

Money is constantly being printed to replace currency that is taken out of circulation due to damage.

If the amount printed exceeds the amount removed that would cause inflation but there are times that probably happens. There are also probably times that less is released than was destroyed. I am. Guessing but it is probably to keep the value of currency stable.

Money functions as a representation of value. Money, in itself, doesn’t have value – it is simply paper and ink (and in modern terms, electronic numbers in a bank account). It is used to exchange for things of value like stuff or labor. This happens because we all agree on it as a society, money is a claim of value not value itself.

For money to work, there needs to be enough in circulation so that day to day economic activities can be carried out – a person can go to a shop and spend it, someone can be paid for their labor etc etc. But if the amount of money available is too much, no one would agree to use it for exchange. For example, sand cannot be used as money – because anyone could just pick it off the ground, it cannot represent value in exchange.

So, for money to be useful, there needs to be enough of it, but there cannot be too much.