Submitted by goaterra t3_127purd in explainlikeimfive
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Submitted by goaterra t3_127purd in explainlikeimfive
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Is it printing money if it’s just kinda… transferred to the business?
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Basically, yes. What matters is the total amount of that currency, and if they just make more, whether digital or not, you get hyperinflation
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Money is really “printed” anymore. Atleast not in a way that’s meaningfully inflationary. Money in printed through the issuance of debt. More gov debt, the more money supply.
Absolutely. That business can then transfer it to someone else for goods and services, aka use like any other money. It's out there in the wider economy behaving like normal money.
So for governments to take on debt without completely fucking over their economies, the money can't be just poofed into existence. It must come from already existing money. The US, for example, borrows money from people by selling treasury bonds. Basically, promises to return the money plus interest over x years.
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There are limits to how much a country can borrow. No one knows exactly how much that is because it varies by country and circumstances. When a country can’t borrow any more you get what happened to Greece a decade ago where they had to balance the budget suddenly and the economy melted down.
Your previous prime minister tried to push through tax cuts that the market thought would cause the deficit to be too high and they had to back off from those plans and get a new prime minister.
Because the more money they print the less value it has. Eventually you'll be better off cutting up your money to wear as a paper hat because it will be worthless. That's what happened in VZ. They also ate the animals out of the zoo.
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The NHS is failing because the money that is supposed to be funding it isn’t actually going into the healthcare. The government hates the NHS and loves private companies. Why do you think every other infrastructure in the UK is private? The conservatives are funded by the people who own these companies.
Trust me, if you get a government in that does fund it properly, it will recover.
Despite what it may seem, most countries do not have infinite debt. In fact, the number of countries in the world that have a fiat currency in their control is very limited.
Greece is a good example of this. No country in the EU has direct control over the Euro. So no country is permitted to just print their way out of debt unaccounted for. So when the Greek economy was crashing and the rest of the EU was strong their currency didn't devalue with their economy causing a crisis where they could not pay bills.
The US tends to be a bit of an outlier in the world in terms of currency. Since US currency is traded all over the world it's not entirely dependent on the US economy to maintain its value. This allows Congress to authorize printing a lot more currency than they might be able to because a very high amount of US currency is being traded between other countries. That doesn't mean the US has no upward limit (a debt ceiling) for how much they can spend. But it does mean that ceiling is a lot higher than most countries.
But for most countries in the world the more debt that you have, the more devalued your currency is, and the less debt you have the more value it will have (assuming all things stay the same). When a country like Britain is weighing spending their primary concern is devaluing their currency too much and making the costs of importing goods too expensive for its residents.
Sometimes this is known as the Devaluation Spiral. You print more money to pay for more things and the value of your currency goes down. So the next year in order to maintain spending you have to print even more money to pay for more things... and the value of your currency goes down. And the next year in order to maintain current spending you have to print even more money to pay for things.
And you don't want that.
As for why the UK doesn't spend more money on healthcare, it's because the people in power prioritize other spending.
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Sand_Trout t1_jef7ije wrote
Because excessive money printing results in excessive inflation, which screws up the economy.