Question about inflation and debt.

[Eclipse26]

For the nth time of discussing it, printing money to pay debts isn't a good solution. If it's only that easy, why most countries are still in debt right? It's because they can't do that. Economically speaking, when you print too much money, it will lead to a big inflation or hyperinflation. Their money will start to lose its value because of too much money circulating the community. That situation already happen in some country in the history and it didn't brought a good result to their country. Printing too much money was never a solution for debts. They have to maintain the circulation of money.

[davinchi]

This has been talked about a lot and you can find answers with a small google search but lets assume you will get the right answer here, even that right answer is not enough to cover all the information we can give you here and even if the answer we give is right, a president usually holds the power to do the wrong thing (seen many times) whenever they want as well so they can actually do the wrong thing.

Normally, nobody does that for the same reason everyone said, inflation. If you print out trillions of dollars to cover your debt, you will have a huge huge inflation and your money will be worthless, everyone will have insane amount of your money and will exchange it for another nations money and suddenly your money worth very little, nobody wants that for their own currency.

[ssamotoev]

This has been talked about a lot and you can find answers with a small google search but lets assume you will get the right answer here, even that right answer is not enough to cover all the information we can give you here and even if the answer we give is right, a president usually holds the power to do the wrong thing (seen many times) whenever they want as well so they can actually do the wrong thing.

Normally, nobody does that for the same reason everyone said, inflation. If you print out trillions of dollars to cover your debt, you will have a huge huge inflation and your money will be worthless, everyone will have insane amount of your money and will exchange it for another nations money and suddenly your money worth very little, nobody wants that for their own currency.

Yeah right, but what are the solutions for govs in such situations?
I'd say they can delay the payment and stimulate the economy by focusing on it, whether it is domestic or foreign one.

[airdnasxela]

This has been talked about a lot and you can find answers with a small google search but lets assume you will get the right answer here, even that right answer is not enough to cover all the information we can give you here and even if the answer we give is right, a president usually holds the power to do the wrong thing (seen many times) whenever they want as well so they can actually do the wrong thing.

Normally, nobody does that for the same reason everyone said, inflation. If you print out trillions of dollars to cover your debt, you will have a huge huge inflation and your money will be worthless, everyone will have insane amount of your money and will exchange it for another nations money and suddenly your money worth very little, nobody wants that for their own currency.

Yeah right, but what are the solutions for govs in such situations?
I'd say they can delay the payment and stimulate the economy by focusing on it, whether it is domestic or foreign one.

There are various ways on how the government pay off their debts. Countries can reduce its debt by manipulating the interest rate. Some country also have tried reducing debt by instituting budget cuts. These are some ways to reduce debts without increasing the tax. But I think most of the time, governments are increasing taxes just to pay their debts. That's why paying proper tax is important for the government.

[fiulpro]

I don't think printing more money is any solution , since it decreases the bus of the country's own money and therefore the people would eventually have to use up more money and they will slowly deplete what they have and it will turn out to be a big recession , therefore I think it is not the solution.
Solution is improving education , jobs , everything which would eventually take time but it will improve the quality dramatically.

[mindrust]

Printing money is a good idea only if your currency is a reserve currency. Otherwise like the others said, you will end up like Venezuela.

How do you think USA get away with it? It is because no matter how much they print, there is still demand. (Or was)

The danger is, now countries like Russia, China, Iran and even some European countries want to use something else. (Euro or gold backed crypto) When this happens, USD will lose its demand.

[mu_enrico]

If a random country is in debt, is printing money a good way to pay it off at the expense of the citizens?

For example, lets say you owe an entity $100. If you print an extra $100 bill you pay off your debt, but unbeknownst to the entity the $100 that they lent you is now worth less.

You should be more specific about what kind of debt it is? Is it foreign debt or domestic debt?
For foreign debt, you should know that the currency exchange rate is affected by the increase/decrease of the local currency supply. So a country could print more (domestic) money, but it would trash its exchange rate, it's the same.

For domestic debt, the government could repay its bond with newly printed money. However, in the end, it will only reduce the country's wealth because of hyperinflation. So no point in doing that. A good government is not likely to scam its own people.

Would the barter system be a good way of combating this?

No, barter is a means of trade, not related to debt and repayment.
Maybe if the debt is pegged to gold (or something stable), then you have a case.

[mamahdedeh]

Printing money is a good idea only if your currency is a reserve currency. Otherwise like the others said, you will end up like Venezuela.

How do you think USA get away with it? It is because no matter how much they print, there is still demand. (Or was)

The danger is, now countries like Russia, China, Iran and even some European countries want to use something else. (Euro or gold backed crypto) When this happens, USD will lose its demand.

right, basically printing excess money is not good for the country's economy. especially with the existence of a global currency that can be used throughout the world, of course it will reduce the demand for the USD, especially the one that began to legalize it is in developed countries, of course it has a big impact

[abhiseshakana]

This has been talked about a lot and you can find answers with a small google search but lets assume you will get the right answer here, even that right answer is not enough to cover all the information we can give you here and even if the answer we give is right, a president usually holds the power to do the wrong thing (seen many times) whenever they want as well so they can actually do the wrong thing.

Normally, nobody does that for the same reason everyone said, inflation. If you print out trillions of dollars to cover your debt, you will have a huge huge inflation and your money will be worthless, everyone will have insane amount of your money and will exchange it for another nations money and suddenly your money worth very little, nobody wants that for their own currency.

Yeah right, but what are the solutions for govs in such situations?
I'd say they can delay the payment and stimulate the economy by focusing on it, whether it is domestic or foreign one.

There are various ways on how the government pay off their debts. Countries can reduce its debt by manipulating the interest rate. Some country also have tried reducing debt by instituting budget cuts. These are some ways to reduce debts without increasing the tax. But I think most of the time, governments are increasing taxes just to pay their debts. That's why paying proper tax is important for the government.

If based on the textbook we learn in school the answer to good debt management is a way to pay off debt. Simply put, in order to be able to repay debts, the state must have a surplus of its budget, if it is a deficit, how can the state repay debt? Talking about government income usually relies on taxes, exports of goods abroad, grant funds, or like Malaysia where the people contribute to repaying government foreign debt. All policy instruments are equally important in achieving development goals. All of the above policies must work together effectively to achieve national goals.

Taxes in many developing countries are made the country's backbone not only to pay taxes but to improve economic facilities and infrastructure development so that GDP also rises. Most importantly for a country's economic cycle, the government must be serious in improving the investment climate, so that investment and economic competition and export power increase. As a result, investment ease scores are getting better and a country is the most attractive investment location in the world.

There are more extreme ways, especially for poor countries or developing countries to pay debts, namely through the mapping of sovereign wealth funds. SWF is a financial vehicle owned by a State that owns or regulates public funds and invests them in broad and diverse assets. Simply put, SWF is state savings. It is hoped that with this SWF there will be no idle and unused state revenue. The revenue can be invested appropriately and with the quality so that a large return can be obtained. There are 2 types of SWF fund sources, the first comes from the results of non-renewable resources (oil and gas) and the second comes from funds in the form of financial assets such as stocks, bonds, property, precious metals, and financial instruments.

[Cacingkemi]

paying off state debt by printing more fiat money is a very bad idea. as you said this will cause hyperinflation and a monetary crisis. in my opinion the best way to pay off state debt is to increase state revenues. by increasing exports from imports, trying to increase the yield of natural resources and trying to use and maximize domestic products. using barter systems I think it's very outdated and inefficient. rather than bartering, it's better to return to gold and silver or switch to using cryptocurrency.

of course printing more money to pay off debt is a very bad idea, because it can have an impact on the country's own currency so that it can become worthless. increasing the results of natural resources for export or import is an efficient way to increase the value of a country's currency, this way has been done to date by most countries by establishing cooperation between one country with another country that has agreed on an agreement. and the barter system is not an effective way because it is an old-fashioned way before currencies were created to make transactions

[Gozie51]

If a random country is in debt, is printing money a good way to pay it off at the expense of the citizens?

For example, lets say you owe an entity $100. If you print an extra $100 bill you pay off your debt, but unbeknownst to the entity the $100 that they lent you is now worth less.

Would the barter system be a good way of combating this?

I think the printing of money in a country that is in debt will further increase the problem. It could lead to inflation.
This is because a country that is in debt means there is hardship.  Debt repayment is not usually solved by printing of new currency.

[BuNga_cute]

It is not advisable to pay debts with printing money, because it will have a bad impact in the future. One of them will be high inflation,
if this happens fiat will lose its value. Then the government would rather increase taxes than pay debts with printing money. So no
wonder for the government tax is very important, because tax is one solution to pay debts.

[cryp24x]

Definitely, Printing money to pay debt has an bad impact to the whole country's economy. It will surely cause inflation and the value of money will be reduced. That is why there is a regulatory body which prevents to print money faster that the growth of the real fiat.

[Kyraishi]

If a random country is in debt, is printing money a good way to pay it off at the expense of the citizens?

For example, lets say you owe an entity $100. If you print an extra $100 bill you pay off your debt, but unbeknownst to the entity the $100 that they lent you is now worth less.

Would the barter system be a good way of combating this?

[Kyraishi]

If a random country is in debt, is printing money a good way to pay it off at the expense of the citizens?

For example, lets say you owe an entity $100. If you print an extra $100 bill you pay off your debt, but unbeknownst to the entity the $100 that they lent you is now worth less.

Would the barter system be a good way of combating this?

That's why inflation is considered by some as an invisible tax.

This is completely possible and evident in countries such as Zimbabwe, Germany in the past and countries like Venezuela now. Printing money to pay back old debt at the expense of fiat currency holders, specifically middle income earners is nothing new.

Why does it affect the middle class the most? The poorest hold little currency to begin with while the richest own factors of production, whose value will rise in nominal terms in line with inflation. That's also a reason why I think decentralized cryptos is a good hedge against this phenomena ever happening in your country.

[Wexlike]

If a random country is in debt, is printing money a good way to pay it off at the expense of the citizens?

For example, lets say you owe an entity $100. If you print an extra $100 bill you pay off your debt, but unbeknownst to the entity the $100 that they lent you is now worth less.

Would the barter system be a good way of combating this?

That's why inflation is considered by some as an invisible tax.

This is completely possible and evident in countries such as Zimbabwe, Germany in the past and countries like Venezuela now. Printing money to pay back old debt at the expense of fiat currency holders, specifically middle income earners is nothing new.

Why does it affect the middle class the most? The poorest hold little currency to begin with while the richest own factors of production, whose value will rise in nominal terms in line with inflation. That's also a reason why I think decentralized cryptos is a good hedge against this phenomena ever happening in your country.

But if the middle class would start to invest in stock companies shouldn't that help a lot with the devaluation of their fiat money ? There is always some kind of path to safe some of your wealth for the long-term.

Lately Germany changed their maximum amount of gold you can buy without identifying yourself to only €2k, there were lines of people in the end of 2019 who were trying to transfer some of their paper money anonymously to some gold coins.

The regular inflation is "okayish", because you don't really notice it immediately. It is like the boiled frog, who just never jumps out until he is cocked.

[abhiseshakana]

That's why inflation is considered by some as an invisible tax.

This is completely possible and evident in countries such as Zimbabwe, Germany in the past and countries like Venezuela now. Printing money to pay back old debt at the expense of fiat currency holders, specifically middle income earners is nothing new.

Why does it affect the middle class the most? The poorest hold little currency to begin with while the richest own factors of production, whose value will rise in nominal terms in line with inflation. That's also a reason why I think decentralized cryptos is a good hedge against this phenomena ever happening in your country.

In my opinion, inflation puts a relatively far greater burden on the poor than the middle class. Simply put the poor class has low purchasing power and usually, shopping is done for primary needs. With inflation, their purchasing power will decrease even more so if what rises is the price of food, the effect is certainly greater for the poor than inflation for non-food products.

The higher the inflation rate means the greater the rate of poverty. Inflation causes the real value of money held to go down. When prices increase, money to buy less (purchasing power goes down). people's purchasing power can be said to decrease if the income earned decreases or vice versa, the price of goods and services increases so that the ability to consume decreases. The decline in purchasing power has resulted in people becoming poorer than before.

Indeed the magnitude of the influence of the inflation rate in each economy class and in cities and villages is different. The classification of economy class is based on the amount of income and the effect of inflation is different in each class depending on the increase in expenditure. Inflation will increase spending on the poor class but will reduce spending on the upper class. Whereas the middle class does not immediately feel the effects of inflation, why?

The middle-class is concentrated in urban areas, the middle-class patterns of consumption are secondary and even tertiary needs, namely durable goods and services which tend to be prestige and comfort. So the expenditure of the middle class is not for basic needs so it will not be too influential.

The use of cryptocurrency, especially bitcoin is indeed a preventive measure to protect the value of your money before inflation occurs. The middle class is also starting to have an awareness to save and invest and the middle class is now a millennial generation who is certainly more understanding about the benefits of the digital economy.

[Hallmader]

If a random country is in debt, is printing money a good way to pay it off at the expense of the citizens?

For example, lets say you owe an entity $100. If you print an extra $100 bill you pay off your debt, but unbeknownst to the entity the $100 that they lent you is now worth less.

Would the barter system be a good way of combating this?

The barter system was a primitive way of doing things that could hardly be applicable to the kind of commerce we have in this modern times. The large-scale commercial transactions of today cannot be supported by a simple barter system. And that is perhaps how it is being replaced with a more efficient means of doing transactions a long time ago. We used gold, silver, copper, and other precious stones to make things easier.

Printing money out of thin air is a rampant problem. And the solution is not barter. The solution is crypto. There is no cheating or faking in crypto.

[TastyChillySauce00]

The barter system was a primitive way of doing things that could hardly be applicable to the kind of commerce we have in this modern times. The large-scale commercial transactions of today cannot be supported by a simple barter system. And that is perhaps how it is being replaced with a more efficient means of doing transactions a long time ago. We used gold, silver, copper, and other precious stones to make things easier.

Printing money out of thin air is a rampant problem. And the solution is not barter. The solution is crypto. There is no cheating or faking in crypto.

I could also see that using the barter system for now is just solving problem with another problem. The fact that crypto is limited supply could bring an end to the massive money printing and therefore saving the whole economy from being overly inflated as well as eliminating any worry that lingers around the people. But, if the crypto being used have a little value and just stuck there, I doubt it will be any better for the whole economy compared to paper money.

[criza]

Like most people here, I too believe just printing and extra $100 would just make the current $100 pretty much worthless. I don't see how barter can be conveniently used to counteract inflation. Sure you get an item more or less of the equivalent value of what you are giving away if you are good at appraising and negotiation but it's too much trouble and also inconvenient if you are going to do it several times for basics.

We can simply put it as a product when the supply for a certain product is high the demand for it would be low causing for the price to go down. Now, think of that product as the money, when the volume of printed money is unctrolled and numerous many people would turn into buying goods and services causing it to be insufficient for the whole people and in return increasing the price for each goods and services.