Why Money Can’t Solve All the Problems

Some people tend to think that one way to solve the problems of scarcity in societies is that government should print more money and pump it into the economy. So by printing more money government can give that money to every individual in the society and all the problems will be solved and no one will be poor in this world.

But that does not happen because printing of more money will lead to hyperinflation under which prices rise 10 to 100 times in very short period of time. Because the problem is not that of scarcity of money but it is of scarcity of goods and services. Since money is only a medium which can be used for buying goods and services but if everyone has money then everyone will be willing to buy, but goods will be same, since there is no increase in production of goods and hence more money will chase same amount of goods leading to inflationary conditions.

Hence it can be said that if it was possible to solve all economic by printing more money then there would have been no need for economics, because the main problem behind all economic problem is not scarcity of money but of resources.

2 comments… add one
  • silly wabbit

    if there’s more money to spend, companies will produce more goods. problem solved! 🙂

    if there’s more money to spend, people will save more and then small biz’s will be able to get better loans and make more product. problem solved! 🙂

    if there’s more money to spend, people will buy their kids more dogs and the dogfood companies will have to produce more. problem solved! 🙂

    my macro-economics prof quit economics right after teaching our class, stating that economists make stuff up with no test cases, and always have; any conclusion can be ‘reasoned’ if there’s no way to test it. Economics is a social science.

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