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ss89898 OP t1_j2e0exb wrote

Reply to comment by Skatingraccoon in ELI5: If money today is all digital, why can't all the countries governments just go on the computer and add like five more zero's to their account and fix everything? Same principal is 100 years ago too I guess, why not just print more cash? by ss89898

I assumed this. Day to day would collapse. Like if everyone was rich there wouldn't be anyone to deliver their mail or clean the streets. But is it possible that governments could do this if somehow all 195 of them agreed? They just never chose this because inflation would destroy everything? Like everything would become the same. Coffee would become $50 a cup or if you wanted to import resources from another country it would just be 10x more expensive and nothing would ever change? Has any country every secretly tried this? Like who is the police in all this?

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Ansuz07 t1_j2e0nbq wrote

> Coffee would become $50 a cup

Exactly this. Prices would simply increase dramatically, rendering the additional money people received moot.

>Has any country every secretly tried this?

Yes, many have, and inflation is always the result. Governments have historically printed excess cash to pay of their own debts, which inevitably leads to massive amounts of inflation. Look up what happened in Zimbabwe.

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ss89898 OP t1_j2e0wrj wrote

I remember Venezuela had something like this too. But I'm not sure if it was to do with the country printing money.

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Moskau50 t1_j2emzcu wrote

> Like who is the police in all this?

It's not that there's an agency that tracks the amount of money and the "value" of goods and services and runs around changing prices to match. It's that, if you have more money, you're more likely to spend it, which means you'll accept a higher price on items. Since you're willing to pay more, companies will raise prices to match. That's what causes inflation.

Repeat this millions of times because all that extra money you spent means everyone else has more money, so they are willing to spend more, which means companies can raise prices, and the cycle continues until you're at new "stable" prices that are simply higher than the original prices, roughly proportionally to the extra money that was injected.

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