Why does a country who prints her own money still borrows from other countries. economists in the house please help.?

It doesn't work that way mehn....it's not about printing money... It's about whats going on with the economy... Value have a major role to play here. If ur economy is flamboyant enough I don't think there will be need to borrow money from other countries. The problem lies with those at the top of affairs in this country.. When they keep stealing funds and saving these funds aboard, developing other countries instead of ours... That s one of the reason why we are still where we are since the 60s... If e shock u sorry oo

you need money to print more money.

youngsahito:
you need money to print more money.

So, we need to borrow 1 trillion Chinese yuan in order to print how much

Ogbomoso economist!

Its not about minting money.

they've been printing more money. you never knew.
but printing more money has it prons and cons.
https://www.nairaland.com/6500896/nigeria-printing-more-money-could

Do u still remember what they taught u in school as one of the characteristics of money that "it must be relatively scarce"?. If u keep on printing money, it becomes so common and loses that basic characteristic of money. That is why inflation is also defined as too much money in circulation but little purchasing power"

Idamond:
Why does a country who prints her own money still borrows from other countries. economists in the house please help.?

Good question!
In simple terms, it is economically wrong for a nation to "continuously" print the money needed to settle her expenses.
The amount of money that circulates in an economy matters to the nation's value of money, currency strength and foreign exchange.
Too much money in circulation would reduce the value of money and spike inflation.
Imagine buying your regular mid-size bread of N200 for N1,000 or more...


Another reason why a government can't print money to fund projects is because there's a high tendency that the project won't grow to the implementation phase.
A government that borrows money is given conditions and is usually monitored to execute the proposal to which the money was borrowed.

youngsahito:
you need money to print more money.

This is so untrue!

Skyfornia:
Not satisfied with all the answers...why is this hard to explain? Where are the economists?? Please come and educate us like we are kids.

Just like the OP asked...if Nigerian government decides to print money to execute some projects like railway, 2nd niger bridge etc instead of borrowing money from another country ..how would that cause inflation??

Note: Whether the amount is borrowed or printed...it will still get into people's hands. So why saying there will be too much circulation of money?? Is the borrowed money when used, not going to circulate??

There's a difference between printing money, and borrowing money to settle government expenses. In simple terms, the difference is in the books of accounts - it's beyond this simple explanation.

If you have N100k, and you are gifted -print-N50k, your balance grows to N150k, which means you have more money to lavish, but if instead, you borrowed the N50k (with 0% interest), well, your worth increases to N150k, but is debited in another book of account with the N50k. So your real balance is N100k.


Do you understand the logic?

I won't be surprised if the OP is one of those who kept shouting "Economics is a useless subject" while in school. Today who is now useless?

That's why they banned crypto

habsydiamond:
It doesn't work that way mehn....it's not about printing money... It's about whats going on with the economy... Value have a major role to play here. If ur economy is flamboyant enough I don't think there will be need to borrow money from other countries. The problem lies with those at the top of affairs in this country.. When they keep stealing funds and saving these funds aboard, developing other countries instead of ours... That s one of the reason why we are still where we are since the 60s... If e shock u sorry oo

This is not answer to the question asked. If you can print your own money, why borrow from others at an interest?

Malawian:

This is not answer to the question asked. If you can print your own money, why borrow from others at an interest?

Because the value of your currency will decline rapidly if you choose to print more of your currency willy nilly.
See: Zimbabwe, Venezuela, Germany after world war 1.

rookidmart:

Because the value of your currency will decline rapidly if you choose to print more of your currency willy nilly.
See: Zimbabwe, Venezuela, Germany after world war 1.

How different is that to borrowing money?

You are a science student ba?
I used to think the same until I got to know so many things about economy.

oz4real83:
Do u still remember what they taught u in school as one of the characteristics of money that "it must be relatively scarce"?. If u keep on printing money, it becomes so common and loses that basic characteristic of money. That is why inflation is also defined as too much money in circulation but little purchasing power"

I understand this well, does it mean that scarcity of money would bring down the prices of goods and services Of a nation??

The fear of hyperinflation wouldn't make that easy. The more we print, the costlier the goods. You can search Google for more comprehensive info.

Kriss216:
Ogbomoso economist!

kkash:


I understand this well, does it mean that scarcity of money would bring down the prices of goods and services Of a nation??

yes, to some extent. If prices are high and no demand because of scarcity of money, producers will be forced to bring down prices, especially for perishable goods. This happens for a normal goods. You will find out that things are cheaper in the evening than in the day.

School na scam, school na scam! Now look at the kind of useless question a full grown man is asking.

Not satisfied with all the answers...why is this hard to explain? Where are the economists?? Please come and educate us like we are kids.

Just like the OP asked...if Nigerian government decides to print money to execute some projects like railway, 2nd niger bridge etc instead of borrowing money from another country ..how would that cause inflation??

Note: Whether the amount is borrowed or printed...it will still get into people's hands. So why saying there will be too much circulation of money?? Is the borrowed money when used, not going to circulate??

habsydiamond:
It doesn't work that way mehn....it's not about printing money... It's about whats going on with the economy... Value have a major role to play here. If ur economy is flamboyant enough I don't think there will be need to borrow money from other countries. The problem lies with those at the top of affairs in this country.. When they keep stealing funds and saving these funds aboard, developing other countries instead of ours... That s one of the reason why we are still where we are since the 60s... If e shock u sorry oo

long talk. You haven't answered the OPs question

Kriss216:
So, we need to borrow 1 trillion Chinese yuan in order to print how much
Ogbomoso economist!

Lmao

Malawian:

How different is that to borrowing money?

I don't think Nigeria borrows naira from the IMF or any other country it borrows money from.

Also if it is borrowed, it has to be paid back - usually with interest- so it will still leave eventually.
Not so with printed money.

oz4real83:
yes, to some extent. If prices are high and no demand because of scarcity of money, producers will be forced to bring down prices, especially for perishable goods. This happens for a normal goods. You will find out that things are cheaper in the evening than in the day.

Thanks alot.... Wld this have a positive impact on a nation??... would the value of the currency increase?

kkash:


Thanks alot.... Wld this have a positive impact on a nation??... would the value of the currency increase?

on aggregate,it does but it will create another problem which is called deflation. That is why countries have central banks which used monetary policies to check the problem. When there is inflation, the CBN withdraws excess money from circulation. When there is deflation, they pump more money into circulation. There is supposed to be a balance of both.

oz4real83:
on aggregate,it does but it will create another problem which is called deflation. That is why countries have central banks which used monetary policies to check the problem. When there is inflation, the CBN withdraws excess money from circulation. When there is deflation, they pump more money into circulation. There is supposed to be a balance of both.

Okay, Thanks alot... So the value of goods and services should be equivalent to the value of the currency in circulation.... An increase or decrease wld lead to inflation or deflation....

Skyfornia:
Not satisfied with all the answers...why is this hard to explain? Where are the economists?? Please come and educate us like we are kids.

Just like the OP asked...if Nigerian government decides to print money to execute some projects like railway, 2nd niger bridge etc instead of borrowing money from another country ..how would that cause inflation??

Note: Whether the amount is borrowed or printed...it will still get into people's hands. So why saying there will be too much circulation of money?? Is the borrowed money when used, not going to circulate??

I think, the borrowed money wld have to be paid back someday, so it wld be taken out of circulation, buh printed money wont be paid back to anyone, so its gon remain in circulation

rookidmart:

Because the value of your currency will decline rapidly if you choose to print more of your currency willy nilly.
See: Zimbabwe, Venezuela, Germany after world war 1.

try to explain clearly and logically how printing more money will result in a rapid decline in the value of the currency.
if the government prints 5 trillion naira for instance and spend this money on infrastructure, agriculture, education and job creation, how will this cause the value of our currency to drop?

Cutehector:
Its not about minting money.

tell us what it's about then.

kkash:



Okay, Thanks alot... So the value of goods and services should be equivalent to the value of the currency in circulation.... An increase or decrease wld lead to inflation or deflation....

not equal but a balance. The quantity of salt u put in your food is not equal to the quantity of food. A little salt can balance the quantity of food even though both quantities are not equal.

gaddafe:
I won't be surprised if the OP is one of those who kept shouting "Economics is a useless subject" while in school. Today who is now useless?

lol
funny you

amrichy:

try to explain clearly and logically how printing more money will result in a rapid decline in the value of the currency.
if the government prints 5 trillion naira for instance and spend this money on infrastructure, agriculture, education and job creation, how will this cause the value of our currency to drop?

I seriously enjoy these ur point.

for ex why not print enough money and let it be restricted from people. just use the money for infrastructure, agriculture, education and so on that would benefit us in future.