Has printing money ever worked?

4Chickens

Just wondered if anyone knows of a country or situation where flooding the economy/banking systems with newly printed money has ever worked. We know it did'nt work in Germany in the 1920's and we know it is not working in Zimbabwe.
Just curious

Rochdale_Pioneers

We do it on a regular basis when we withdraw old notes and flood the economy with new notes. It works fine. They press the start button on the presses and out come the notes as if by magic at the other end.

napoleon

cindiedunkley wrote: »

Just wondered if anyone knows of a country or situation where flooding the economy/banking systems with newly printed money has ever worked. We know it did'nt work in Germany in the 1920's and we know it is not working in Zimbabwe.
Just curious

Of course it never worked. The Labour party aren't that bothered though. They know it'll be the Tories that'll have to deal with a mess. It's a hospital pass of massive proportions

4Chickens

I mean printing money excessively above what is already in circulation, not just replacing old notes with new.

purch

I mean printing money excessively above what is already in circulation, not just replacing old notes with new

The Quantative Easing that is likely to be undertaken has never occured under circumstances remotely similar to today, and has to be viewed in that context.

Trying to compare it to any other time that the Money Supply was increased significantly will almost certainly lead you to draw the wrong conclusions.

The only thing that appears to be "Hyper Inflating" are the continued ludicrous references to Zimbabwe and Germany in the 1920's

Rochdale_Pioneers

purch wrote: »

The Quantative Easing that is likely to be undertaken has never occured under circumstances remotely similar to today, and has to be viewed in that context.

Trying to compare it to any other time that the Money Supply was increased significantly will almost certainly lead you to draw the wrong conclusions.

The only thing that appears to be "Hyper Inflating" are the continued ludicrous references to Zimbabwe and Germany in the 1920's

Its not ludicrous! The moment we print a single additional pound, our inflation rate will jump to 16 sextillion percent just like Zimbabwe! America is printing money and the same thing has happened there, and there's nothing that new US president Barak Mugabe can say to prove the nutters wrong....

Generali

cindiedunkley wrote: »

Just wondered if anyone knows of a country or situation where flooding the economy/banking systems with newly printed money has ever worked. We know it did'nt work in Germany in the 1920's and we know it is not working in Zimbabwe.
Just curious

The Americans tried it in 1931 in deflationary circumstances that have echoes today and it didn't work - it just had no impact. It is important to remember that we live in a very different world now to the world in 1931.

The Japanese tried it in 2001(?) with some limited short term success it seemed at the time although it's all rapidly going back down the pan over there.

Zimbabwe is an extreme example. Very extreme and there aren't any obvious parallels between the situation there and here (apart from the rather funny thing the Daily Mash did). I think it's safe to say that the UK is a long way from a massive cholera outbreak and if things get that bad nobody will be able to afford broadband so you won't be able to drag this post up again anyway.

Germany 1920s is an interesting one as it didn't involve printing money in the normally recognised sense of the term, initially at least. What happened was that a demand was made for certain repayments of reparations which was far in excess of the Gold held by the German Central Bank/Government so they had to issue bonds to try to sell to foreign investors to get the cash to make the payments. This caused a massive devaluation of the Mark which meant importers had to pay more. That led to domestic inflation and in the end to a rapidly rising velocity of circulation* pushing up the money supply. In the end the Government had no choice but to print money to meet demand for bank notes which made matters worse but certainly didn't kick off hyperinflation.




*Velocity of circulation is the number of times money is spent in a particular time period and is a part of how you measure the money supply (amount of 'cash') in an economy.

Money supply = Amount of money x velocity of circulation

hearts

QUOTE: "Has printing money ever worked?"

It has always worked for me. Apart from the one time I got caught, but thats a different thread. ;-)

ad9898_3

I can't see it ever working, if you have a pound it buys you a certain amount, if there are too many 'pounds' in circulation your pound is worth less and so buys you less, leaving you in the same position (or worse) than you were initially, the only difference now is you have '2 pounds' instead, yet they will only buy you the same amount as when you had 1 pound.

Mr_Matey

I remember a Sherlock Holmes novel where Professor Moriarty tried to print money.

It didn't work as Holmes cottoned on.

ruggedtoast

I think its more the loss of confidence it inspires in the countries finances, rather than the act of adding to the money supply.

Money is largely created by borrowing. In a recession people default, pay down debt, or save. This results in the money supply contracting.

It might seem more logical for the country to take back control of the money supply itself and print more to spend on development projects. Thereby obviating their childrens commitment to paying interest ad infinitum to usurers.

But this tends to get financiers all upset as they dont then get to profit by lending us our own cash, and get the terrible vapors that others may try the same, so they pull the plug.