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Why can't a country print its own money to spend it only abroad?
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If a country prints money and distributes it between the people, it causes inflation. But what if a country prints its own money to spend ONLY abroad, which would allow a country to buy whatever it wants. What's wrong with this logic?
inflation
asked 8 hours ago
Dylan ZammitDylan Zammit
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Dylan Zammit is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
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add a comment |
$begingroup$
If a country prints money and distributes it between the people, it causes inflation. But what if a country prints its own money to spend ONLY abroad, which would allow a country to buy whatever it wants. What's wrong with this logic?
inflation
asked 8 hours ago
Dylan ZammitDylan Zammit
1183 bronze badges
New contributor
Dylan Zammit is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
$endgroup$
add a comment |
$begingroup$
If a country prints money and distributes it between the people, it causes inflation. But what if a country prints its own money to spend ONLY abroad, which would allow a country to buy whatever it wants. What's wrong with this logic?
inflation
asked 8 hours ago
Dylan ZammitDylan Zammit
1183 bronze badges
New contributor
Dylan Zammit is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
$endgroup$
If a country prints money and distributes it between the people, it causes inflation. But what if a country prints its own money to spend ONLY abroad, which would allow a country to buy whatever it wants. What's wrong with this logic?
inflation
inflation
asked 8 hours ago
Dylan ZammitDylan Zammit
1183 bronze badges
New contributor
Dylan Zammit is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 8 hours ago
Dylan ZammitDylan Zammit
1183 bronze badges
New contributor
Dylan Zammit is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 8 hours ago
Dylan ZammitDylan Zammit
1183 bronze badges
New contributor
Dylan Zammit is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 8 hours ago
Dylan ZammitDylan Zammit
1183 bronze badges
asked 8 hours ago
Dylan ZammitDylan Zammit
1183 bronze badges
1183 bronze badges
New contributor
Dylan Zammit is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
New contributor
Dylan Zammit is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
add a comment |
add a comment |
1 Answer
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In order for one country to spend in another, it needs to exchange its currency for the currency of the other nation. This is done through something called the foreign exchange market. Like most markets however, the laws of supply and demand apply here too. If a country suddenly starts printing a lot of money, the actual value of its money in the foreign exchange market will go down (due to its increased supply). This will ultimately mean the currency will depreciate with respect to others, and will thus have lower buying power.
edited 7 hours ago
Henry
3,8764 silver badges16 bronze badges
answered 8 hours ago
Samvit AgarwalSamvit Agarwal
562 bronze badges
$endgroup$
1
$begingroup$
A difficult issue is that if I go abroad and give somebody bits of paper in exchange for stuff, the person accepting the pieces of paper presumably needs to find some value in them. If they have no intrinsic or exchange value (they apparently cannot be used in my country to buy stuff) then I am unlikely to be able to use them. On the other hand, if my money has some kind of intrinsic value as silver trade dollars did, then they may prove to be acceptable
$endgroup$
– Henry
7 hours ago
2
$begingroup$
@Henry Please post answers as answers.
$endgroup$
– Giskard
6 hours ago
add a comment |
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1 Answer
1
active
oldest
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1 Answer
1
active
oldest
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active
oldest
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active
oldest
votes
$begingroup$
In order for one country to spend in another, it needs to exchange its currency for the currency of the other nation. This is done through something called the foreign exchange market. Like most markets however, the laws of supply and demand apply here too. If a country suddenly starts printing a lot of money, the actual value of its money in the foreign exchange market will go down (due to its increased supply). This will ultimately mean the currency will depreciate with respect to others, and will thus have lower buying power.
edited 7 hours ago
Henry
3,8764 silver badges16 bronze badges
answered 8 hours ago
Samvit AgarwalSamvit Agarwal
562 bronze badges
$endgroup$
1
$begingroup$
A difficult issue is that if I go abroad and give somebody bits of paper in exchange for stuff, the person accepting the pieces of paper presumably needs to find some value in them. If they have no intrinsic or exchange value (they apparently cannot be used in my country to buy stuff) then I am unlikely to be able to use them. On the other hand, if my money has some kind of intrinsic value as silver trade dollars did, then they may prove to be acceptable
$endgroup$
– Henry
7 hours ago
2
$begingroup$
@Henry Please post answers as answers.
$endgroup$
– Giskard
6 hours ago
add a comment |
$begingroup$
In order for one country to spend in another, it needs to exchange its currency for the currency of the other nation. This is done through something called the foreign exchange market. Like most markets however, the laws of supply and demand apply here too. If a country suddenly starts printing a lot of money, the actual value of its money in the foreign exchange market will go down (due to its increased supply). This will ultimately mean the currency will depreciate with respect to others, and will thus have lower buying power.
edited 7 hours ago
Henry
3,8764 silver badges16 bronze badges
answered 8 hours ago
Samvit AgarwalSamvit Agarwal
562 bronze badges
$endgroup$
1
$begingroup$
A difficult issue is that if I go abroad and give somebody bits of paper in exchange for stuff, the person accepting the pieces of paper presumably needs to find some value in them. If they have no intrinsic or exchange value (they apparently cannot be used in my country to buy stuff) then I am unlikely to be able to use them. On the other hand, if my money has some kind of intrinsic value as silver trade dollars did, then they may prove to be acceptable
$endgroup$
– Henry
7 hours ago
2
$begingroup$
@Henry Please post answers as answers.
$endgroup$
– Giskard
6 hours ago
add a comment |
$begingroup$
In order for one country to spend in another, it needs to exchange its currency for the currency of the other nation. This is done through something called the foreign exchange market. Like most markets however, the laws of supply and demand apply here too. If a country suddenly starts printing a lot of money, the actual value of its money in the foreign exchange market will go down (due to its increased supply). This will ultimately mean the currency will depreciate with respect to others, and will thus have lower buying power.
edited 7 hours ago
Henry
3,8764 silver badges16 bronze badges
answered 8 hours ago
Samvit AgarwalSamvit Agarwal
562 bronze badges
$endgroup$
In order for one country to spend in another, it needs to exchange its currency for the currency of the other nation. This is done through something called the foreign exchange market. Like most markets however, the laws of supply and demand apply here too. If a country suddenly starts printing a lot of money, the actual value of its money in the foreign exchange market will go down (due to its increased supply). This will ultimately mean the currency will depreciate with respect to others, and will thus have lower buying power.
edited 7 hours ago
Henry
3,8764 silver badges16 bronze badges
answered 8 hours ago
Samvit AgarwalSamvit Agarwal
562 bronze badges
edited 7 hours ago
Henry
3,8764 silver badges16 bronze badges
edited 7 hours ago
Henry
3,8764 silver badges16 bronze badges
edited 7 hours ago
Henry
3,8764 silver badges16 bronze badges
3,8764 silver badges16 bronze badges
answered 8 hours ago
Samvit AgarwalSamvit Agarwal
562 bronze badges
answered 8 hours ago
Samvit AgarwalSamvit Agarwal
562 bronze badges
answered 8 hours ago
Samvit AgarwalSamvit Agarwal
562 bronze badges
562 bronze badges
1
$begingroup$
A difficult issue is that if I go abroad and give somebody bits of paper in exchange for stuff, the person accepting the pieces of paper presumably needs to find some value in them. If they have no intrinsic or exchange value (they apparently cannot be used in my country to buy stuff) then I am unlikely to be able to use them. On the other hand, if my money has some kind of intrinsic value as silver trade dollars did, then they may prove to be acceptable
$endgroup$
– Henry
7 hours ago
2
$begingroup$
@Henry Please post answers as answers.
$endgroup$
– Giskard
6 hours ago
add a comment |
1
$begingroup$
A difficult issue is that if I go abroad and give somebody bits of paper in exchange for stuff, the person accepting the pieces of paper presumably needs to find some value in them. If they have no intrinsic or exchange value (they apparently cannot be used in my country to buy stuff) then I am unlikely to be able to use them. On the other hand, if my money has some kind of intrinsic value as silver trade dollars did, then they may prove to be acceptable
$endgroup$
– Henry
7 hours ago
2
$begingroup$
@Henry Please post answers as answers.
$endgroup$
– Giskard
6 hours ago
1
1
$begingroup$
A difficult issue is that if I go abroad and give somebody bits of paper in exchange for stuff, the person accepting the pieces of paper presumably needs to find some value in them. If they have no intrinsic or exchange value (they apparently cannot be used in my country to buy stuff) then I am unlikely to be able to use them. On the other hand, if my money has some kind of intrinsic value as silver trade dollars did, then they may prove to be acceptable
$endgroup$
– Henry
7 hours ago
$begingroup$
A difficult issue is that if I go abroad and give somebody bits of paper in exchange for stuff, the person accepting the pieces of paper presumably needs to find some value in them. If they have no intrinsic or exchange value (they apparently cannot be used in my country to buy stuff) then I am unlikely to be able to use them. On the other hand, if my money has some kind of intrinsic value as silver trade dollars did, then they may prove to be acceptable
$endgroup$
– Henry
7 hours ago
2
2
$begingroup$
@Henry Please post answers as answers.
$endgroup$
– Giskard
6 hours ago
$begingroup$
@Henry Please post answers as answers.
$endgroup$
– Giskard
6 hours ago
add a comment |
Dylan Zammit is a new contributor. Be nice, and check out our Code of Conduct.
Dylan Zammit is a new contributor. Be nice, and check out our Code of Conduct.
Dylan Zammit is a new contributor. Be nice, and check out our Code of Conduct.
Dylan Zammit is a new contributor. Be nice, and check out our Code of Conduct.
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