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I think the parent is referring to the ability to sell bonds (borrow money) in their own currency. If Zimbabwe wants to borrow money, nobody will agree to be re

by netcan 11y ago

I think the parent is referring to the ability to sell bonds (borrow money) in their own currency. If Zimbabwe wants to borrow money, nobody will agree to be repaid in Zimbabwean currency. So, they need to borrow in foreign currency, which they can't print. But, I think he overstated that point quite a bit. First, most countries do sell bonds in their own currency, so they can print and devalue to pay it back if necessary. They use a combination of their own bonds and foreign denominated bonds. More importantly (especially in Greece's case), most government's obligations are not bonds. They're salaries, pensions and other things denominated in local currency. If Greece had its own currency, they would print more of it and use that money to pay government salaries and pensions. It is true though that the US has an advantage. (A) they have very little foreign currency obligations and (B) inflation is like a cost to everyone that holds a currency. When the US prints money, the cost is spread out among anyone who holds dollars. Lots of them are not american.

kamaal 11y ago
>>If Greece had its own currency, they would print more of it and use that money to pay government salaries and pensions. Doesn't this lead to hyper inflation situations. Basically money is what you trade for effort. When you freely "print money" you are simply supplying a lot of cash for the same effort. In return you simply pay a higher price for the same things. There fore only way to increase the supply of money is to increase trade able effort in some way. How will simply printing money solve anything? And how are few countries exempt from this rule?
- netcan 11y ago
  It causes inflation. A lot of it causes hyperinflation. With lots of extra caveats and clauses, naturally. You can think of it as a tax on everyone who holds the currency (or other assets directly tied to it, like bonds). If the government prints money, they have it and they can spend it on (for example) salaries. That solves the problem of not being able to pay salaries. No country is exempt, but if a lot of foreigners hold reserves in your currency, they have to share in the cost of inflating it. Al lot or a little is relative to the total stock of money in circulation. Lots of countries hold US Dollars, so the US can print with milder domestic consequences.

by netcan 11y ago

kamaal 11y ago

>>If Greece had its own currency, they would print more of it and use that money to pay government salaries and pensions. Doesn't this lead to hyper inflation situations. Basically money is what you trade for effort. When you freely "print money" you are simply supplying a lot of cash for the same effort. In return you simply pay a higher price for the same things. There fore only way to increase the supply of money is to increase trade able effort in some way. How will simply printing money solve anything? And how are few countries exempt from this rule?

netcan 11y ago
It causes inflation. A lot of it causes hyperinflation. With lots of extra caveats and clauses, naturally. You can think of it as a tax on everyone who holds the currency (or other assets directly tied to it, like bonds). If the government prints money, they have it and they can spend it on (for example) salaries. That solves the problem of not being able to pay salaries. No country is exempt, but if a lot of foreigners hold reserves in your currency, they have to share in the cost of inflating it. Al lot or a little is relative to the total stock of money in circulation. Lots of countries hold US Dollars, so the US can print with milder domestic consequences.