why cant we just print some more money?

pam_smith

Why cant the bank of england just print some more money if they run short?
Pam

tsharp

Inflation would be rampant, then they'd have to print more, then inflation would rise, then they'd have to print more - see the cycle?

Look at zimbabwe's currency for an example.

pam_smith

What does inflation really mean tho?

tsharp

Google it - i fear this is a wind up.

ajaney

The governement or Bank of England can print as much money as they want BUT the problem is that doing that increases our deficit (we go more & more in debt). Printing lots of £ notes decreases the value of the £ (it is worth less because there is so mouch). Inflation will then go up & they you could end up with Hyper inflation.

Depending on how interested in the subject you are, there is an article here about what happened in Germany after the 1st world war.

http://www.usagold.com/germannightmare.html

Hope it makes some kind of sense.

pam_smith

please please - this is not a wind up- we are 3 girls who work in an office and
we have no real idea how this inflation thing works.

ok will google it but I was being serious.

Thanks Pam

sturll

It is when the costs of goods and services rise.

If inflation is at 5% then you get a wage increase of 2% you have a defecit of 3% on last year. Which in laymans terms means you have less available cash, which means you spend less which means less tax. Same thing when petrol increases. This in turn means your money is now worth less than the same time last year.

Obviosuly this compounds and people then put less money into the banks, the systems etc..

So you will notice that its not a case of the government favouring big business and pouring billions into them, but more a case of supporting the banks to help keep the economy stable, inflation low and protect your savings.

jenjade

basical they print more money prices go up so a choc bar will go up from for example 45p to 1.30 so we just use more and more money! when we go on holiday sometimes it is scary how much stuff costs in other currancys

mbaz

The more they print the less it's actually worth. things like gold are expensive because they are rare. If the bank of England just printed more money £10 then would be worth less than it is now so we'd still be in the same situation

tsharp

Right now a million pounds would be a lot of money if it just landed in your bank account, right?

But what if everyone else had the same thing happen to them, or a loaf of bread was £150, that million would be worth less than it was before.

Zimbabwe now prints notes in 100 Billion Dollar note denominations - and it's all but worthless. That's how bad things can get.

BeeUK

Inflation, put very simply, is the rate at which prices increase, so if inflation on loaves of bread was 5%, and today a loaf of bread cost £1...next year it would cost £1.05...and the year after £1.1025...

If you had £100 today, you could buy 100 loaves of bread

If, suddenly, the amount of money that was in circulation in this country doubled, it would mean with your £100 you could only buy 50 loaves of bread because the bread maker would need to charge £2 a loaf to make the same product.