Opinion: Printing More Currency Will Not Fix Inflation
Often, I hear this idea that we should just print more money. In the face of growing inflation and a rapid decline in supplies, printing money seems like a magical solution to make everyone wealthy and eliminate poverty. Everyone would have more money and therefore be more affluent, right?
In actuality, printing money is contrary to the most basic principles of economics. Economics is based on the idea of supply and demand. If we printed more money, there would be an artificial overabundance of demand – money – but the supply of goods would not increase at the same rate.
What results is dangerous inflation. Prices would increase to a level where the newfound money would be worthless.
This situation has happened time and time again throughout history.
After World War I, the Weimar Republic established in Germany printed ridiculous amounts of money to deal with their financial crisis. The German mark, their form of currency, became so worthless that people would use it as wallpaper and firewood because the currency was cheaper than those goods. One loaf of bread cost half a mark in 1918, but the price rose to 200 million marks by 1923.
More people had money to buy things, but there was only so much supply, so prices increased. The newly-printed money they found lost value and did not allow for everyone to buy goods.
The consequences are clear: printing money drastically raises prices and lowers people’s purchasing power and savings.
Even today, with gas prices and everyday items at extreme highs, printing money and dispersing it into the pockets of consumers would raise the supply of money yet also raise the prices. The money would become useless.
People don’t just magically become wealthy. The U.S. dollar is a piece of paper. It is not backed by a precious metal like gold or silver.
A new idea in economics, according to Investopedia, is that of Modern Monetary Theory (MMT), the belief that a well-established government like the United States can print money or take in excessive amounts of debt to operate the government.
Congresswoman Alexandria Ocasio-Cortez, who has an economics degree from Boston University, appeared to advocate for MMT when she said the United States should “break the mistaken idea that taxes pay for 100 percent of government expenditure,” instead supporting deficit spending.
With a national debt at almost $29 trillion, the United States seems to have turned to MMT. It is impossible for our country to pay that back. America’s spending spree began in the 20th century starting with Woodrow Wilson all the way to Donald Trump, and the trend will continue with President Biden.
The United States’ financial practices have been incompetent, and printing money is a way they have exercised this ignorance. Despite politicians’ efforts to create an economic utopia where everyone has money, it is futile and, characteristic of a utopia, unattainable.
Poverty can never be eliminated. There will always be people with higher purchasing power than others. Printing money cannot eliminate this gap because the economic consequences of printing money is not an increase for financially stable people, it is higher prices and inflation.
The old saying stands true “Money doesn’t grow on trees.” The United States is operating under dangerous financial practices. “Why don’t we just print more money?” is a hazardous question.
Browder is an opinion writer.