Why the goverment of a country wouldn’t just make more money to make the country rich?
In: Economics
That’s what inflation is. Because of supply and demand, more money makes prices go up. Think of it like this: Everyone has a dollar and there’s a guy selling apples for a dollar. He has enough apples so each person can get one apple. Now everyone gets 2 dollars, but the guy has the same amount of apples. One guy decides he wants two apples, so he buys two. Other people see that there aren’t enough apples now, so they try to buy two apples also. But the apple vendor thinks, hey, if I raise my price to two dollars, then i can give everyone an apple and get twice the money! so the next day he raises the price to two, and while people are unhappy about it, they figure things are just like before, so they get one apple for two dollars. Now that apples are worth two dollars, you could say the value of the dollar just got cut in half, because it’s only worth half an apple now.
So what do you do? You print even more money so people can afford 2 apples again, and now everyone gets 4 dollars.
When governments do this, the money eventually becomes worthless and you have places like Zimbabwe, where people were buying bread with carts full of money, and the government printing $100,000,000,000,000.00 notes.
https://en.wikipedia.org/wiki/Inflation
Governments do this all the time, but usually there are central banks that control how much inflation can be created to keep it from running away like in Zimbabwe.
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