If You Have The Ability to Create Your Own Currency, How Can You Ever Be Broke?

[KFredrick]

54. If it were only that easy

If the government could just print all the money we need with no consequences, why shouldn't they do that and send 2 million dollars or so to every household in America? This would solve the housing crisis and the economic malaise all at once.

That wouldn't work because nobody would bother working for money anymore. It would create a disconnect between the currency and the real value of the goods and services behind it. Currency is just an easier way of exchanging labor and goods between ourselves. Printing paper money well in excess of the value of those goods results in people demanding more of it for the same goods and services. Runaway inflation results.

One of the reasons for this is increasing the money supply creates disincentives to produce. Why should we all work if we can just print money right? Goods become more scarce as a result and prices begin going up because demand exceeds supply.

The US Government is playing a dangerous game right now with our currency, we may be the reserve currency today but that can change. A few more steps toward insolvency and we might find nobody wants to buy our debt anymore. Fiscal collapse will be the result.