Printing Money - What Does This Mean?

artha

There have been several mentions here and in the press about the Govenment printing money. This is seen as bad for the saver and the average person in the street but no-one actually explains why and how you avoid/offset the effects. Can someone explain and settle the nerves of those mentioning this in their posts but not knowing what it means?

Gwhiz

If more money chases the same amount of goods then you get inflation. That means the £ in your bank is worth less,

That's the real simple answer.

Oh..and they don't have to actually print the money... it's all done with compooters!

Farway

The idea if implemented is NOT to offset the effects, thus to get inflation would be the goal, the thought being that if stagflation occured, as in Japan for ten years, then this would be worse than inflation for the average citizen

No expert at all, and no idea if viable option or not

sabretoothtigger

1 cake, 4 slices. Everyone has their own piece. Same cake, 8 slices and you have still have your 1 slice but its smaller. Now you are poorer, this is inflation

CLAPTON

sabretoothtigger wrote: »

1 cake, 4 slices. Everyone has their own piece. Same cake, 8 slices and you have still have your 1 slice but its smaller. Now you are poorer, this is inflation

unless of course the size of the cake increases ... which is the purpose of the proposed financial easing.

Gwhiz

I'd take a doughnut as compensation

purch

Printing/Creating money, when the economy doesn't expand, and the velocity of the money supply is increasing, or increases due to the extra money is Inflationary.

In the current situation in this country the velocity of the money supply is shrinking dramatically and asset values are deflating just as dramatically. In these circumstances the extra money is not necessarily inflationary.

Howver it has to be watched carefully, and if economic growth does not resume, or the velocity of money moving around the economy begins to increase then it will be inflationary unless the Government cannot find a way to quicky remove the newly created money.

arcadia00

Gwhiz wrote: »

If more money chases the same amount of goods then you get inflation. That means the £ in your bank is worth less

And if the speed at which that money chases around after the goods is hyper then you get hyperinflation. That means the £ in your bank is worthless

Just_landed

artha wrote: »

There have been several mentions here and in the press about the Govenment printing money. This is seen as bad for the saver and the average person in the street but no-one actually explains why and how you avoid/offset the effects. Can someone explain and settle the nerves of those mentioning this in their posts but not knowing what it means?

If you use google type in "the pound in your pocket" and see what comes up, fond memories , my a**e

NumbersGuy_2

CLAPTON wrote: »

unless of course the size of the cake increases ... which is the purpose of the proposed financial easing.

Not a valid comparison. The cake in your example being the economy (what the easing is 'hoped' to stimulate) - so people have to WORK to get some of that 'growing' cake (although you say growing, actually if the government's/BoE plan works - just declining less (recession) than without the printing money option).

The cake in the example you quote being a person's SAVINGS. I.e. the money they already have.

So they are losing wealth and have to WORK (if the outcome is as planned and jobs in the economy are maintained/created) to get it back.

It is wealth transfer 'by stealth' (especially as many people don't understand this) from those who have wealth to subsidise those who don't have it.