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