My best friend, Sohini – is very emotional, she cannot see anyone suffering, always tries to help others, and sometimes she expresses her misery by saying that “I wish I had a lot of Money!” One day, her patience was broken and she told me that if the RBI wants they can print more and more money, and can give to everyone, then there will no one poor in the country. But the RBI does not do it, but why not? She asked me, I thought that her point is right, but why does the RBI not do it, I did not know it then, I then joked to her that perhaps everybody would be rich, that’s why? But really, why cannot any country print money as per their wish? It’s a matter of little thought; do you know why a country cannot print unlimited money? Has this question ever come to your mind? Surely it must have come. You might have even thought that when India has its own printing machine, then why does India not print Unlimited Notes? Then, there will be no poor in the country, no one will be unemployed, no one will sleep on the sidewalks without eating at night. But the government does not do anything like that. And why would any country not be able to print unlimited notes? – Today we will know the answers to all these questions in this article.
But if you don’t want to read this article, then you may watch our video on this topic. We’ve made this video in three languages – which are English, Hindi, and Bengali.
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Is it possible to print unlimited money for a country?
The first thing I will say to you people is –
What is currency?
Currency means money, it is an exchange medium of goods or services of a country. It is a form of capital, which means “Rupee of India“, “Taka of Bangladesh“, “Dollar of US“, “Yen of Japan“, etc.
Actually, the currency of any country has no value. Currency values are available only when you can buy something from that currency or money. That is, the currency we have has been valued until we get something in exchange for that money. And if we have millions of rupees but if we cannot buy anything from them, then what is the value of that money? That money would be nothing more than a piece of paper for us.
However, in the history we have known that there was no currency in ancient times, even then things were purchased and sold, but it was known as Barter System. That is, I have wheat, you have rice, you give me rice and in return, I will give you wheat. But there is no such tradition now. Now we have to pay money to buy something. And in exchange for that money, we can buy anything.
We all know that only the Reserve Bank of India or the RBI has the right to print money in India. But earlier the Ministry of Finance used to print notes of one rupee and two rupees, but they do not print anymore. But on which basis RBI prints currency? And why it does not print more and more to release everyone from the hands of poverty? – And what will happen if it prints a lot of currency? One by one we will know answers of all these questions.
First of all, we will talk about,
On what basis does any country print money?
If I take India, then we will see that the amount of services and goods manufactured in India in 1 year by calculating the value, only that amount of currency is printed in India. As much as the market value of Goods and Services, the RBI can print the same amount of money, neither more than that nor less than that. Let’s say that there are 10 people in a year in India and a total of 20 kg rice has been produced in that year, the market value of the same 20 kg rice is 20 × 30 = 600, which means that in India RBI can print only 600 rupees a year. Neither more than that nor less than that.
Now we will talk about why Limited Money is printed? – And
What will happen if unlimited Money is printed?
If I take the example that I gave a while ago – you will see that there were 10 people in India in a year, 20 kgs of total rice were produced and the total capital was 600 rupees. In that year, what would happen if the RBI had printed 1200 rupees? First, the amount of 600 rupees was now doubled, i.e. 1200 rupees had come in the market, everybody had twice the money but the production of rice remained 20 kgs only.
The same 20 kgs rice is the total food, after buying it on rupees 30, the whole rice will be over. But people have money now, but they are not able to buy anything to feed themselves, and are dying due to their incapability to feed themselves, then what is the value of that money? Definitely, it has no value because if ever the public gets more money or government gives more money, then the situation which will arise is inflation. Because production is only 20 Kgs, but the RBI has printed Rs. 1200 instead of 600 rupees. Then the price of 20 kg of rice will be increased from 30 rupees to 60 rupees. That is, the price of rice will be increased, which is called inflation in the language of economy.
In history it has been seen so far, in two countries due to the unlimited printing of currency, inflation had arisen. 1) Germany and 2) Zimbabwe.
After losing the First World War, it had a major impact on the economy of Germany. To compensate Germany had taken loans from many countries, and they were convinced that they would win in World War II and will pay all the loans. But unfortunately Hitler’s Germany was defeated in World War II, then Germany’s situation had worsened, and the creditors were then pressuring for money, without finding any solution the German Government printed many notes by thinking that they will pay all the loans, due to which the price of things increased so much that inflation generated. It took Germany a lot of time to get out of that situation.
A few years ago, Zimbabwe also made the same mistake. In 2001 the President of Zimbabwe (Robert Mugabe) saw that most people of his country were poor, so he printed a lot of currency and spread it all over the country, made everyone rich, everyone had a lot of money, As a result, the people of Zimbabwe had to pay a lot of money to buy a little thing.
If we have a lot of things to buy and everyone has a lot of money, then the demand for that item will increase automatically, and in spite of the high demand, if the supply is less than the price touches the sky, it was seen in Zimbabwe.
When everyone has a lot of money, nobody thinks of work, no one goes to work, as a result, the work stops and the supply of various products automatically decreases.
So if someone wanted a pack of ordinary bread, then he used to pay a lot of money. The bread which was earlier sold in 10 rupees due to the people had a huge amount of money they had to buy the same bread by giving around 1 million rupees. Inflation in Zimbabwe was so severe that it was called Hyperinflation of Zimbabwe. If you do not believe, then search in Google by typing Hyperinflation of Zimbabwe. Zimbabwe’s situation was so bad that Zimbabwe’s 10 billion dollars were equal to 1 dollar of US, the value of Indian rupees was less than 50 rupees.
So it is not possible to eliminate poverty and unemployment of any country by printing a lot of money or by giving lots of money, think carefully that why the people are working today? Because they get money, and by that money, they can meet their needs. And if everyone already had that money, then why would anyone do anything? Then nobody will want to do anything, nor would they want to take the country forward. Therefore, no country can ever print more money than needed.
So, friends, I hope it is now completely clear to you, that on which basis a country prints currency and why it cannot print unlimited money?
If you did not understand, tell us in the comment box of our video. See you again next Saturday at 7:00 pm in the evening. Till then THINK POSITIVE, DO POSITIVE & GO AHEAD…… THANK YOU…
