It is not a new thing for any economy to go through phases of economic problems and in certain cases falling short of actually putting those problems under control. These economic problems include inflation, unemployment, deflation and so on. No matter if it is a developing country or a developed one, both are equally subject to fall prey to such problems. While the economy goes through this period of uncertainty many people think that it is feasible to print more money to tackle the economic issues such as inflation, etc. But this is not a very feasible option in the reality.
The monetary decisions of any country is taken by the government of the respective country i.e., the government decides which denominations are printed and the design of bank notes and other security measures. It is the responsibility of the head bank of the country to follow the protocols while printing the money. There is always a limit that is set with respect to the printing of money. No country can singlehandedly print money in an unlimited manner whatsoever maybe the reason as more money leads to more economic issues.
Reasons why printing more money leads to more problems:
Whenever there is an increase in the supply of a certain good or commodity in the market with respect to its demand, the price of the commodity falls. This is also true in case of money. When there an uncalculated, increased production or printing of money, the money output gets divided within the entire population accordingly. Now each member of the society owns a greater amount of money. This leads to a fall in the value of money since everyone now has more money irrespective of the actual amount that they are supposed to have/ own. As the value of money falls, there is a rapid increase in the prices of the goods and commodities present in the market resulting in inflation i.e., an increase in the overall level of prices in the economy. For example, in January 1921, a daily newspaper in Germany cost 0.30 marks. Less than two years later, in November 1922, the same newspaper cost 70,000,000 marks. All other prices in the economy rose by similar amounts. This inflation was a result of a three times rise in the quantity of money present in the economy which further led to fall in the value of money. This example clearly shows inflation not only depends on the production of goods and services but also depends on the value and quantity of money present in an economy. Inflation further gives rise to another economic problem i.e., unemployment. As the prices of the goods and commodities rise, people, especially the firms in certain cases fall short of adequate resources to continue with the production activities. This further leads to the decision of reducing the number of workers working at the firm or leads to the termination of the working periods of workers in the firm. When this occurs at an widespread and increased basis, it leads to unemployment on a mass scale and causes widespread economic disruption and gives rise to a state of unrest in the society.
To conclude the answer of the question asked, “does printing more money solve all the economic issues?” The answer is “NO”. Rather it leads to further disruption in the economy and gives rise to unprecedented social unrest. Thus the government puts a limit on the production of Money in each year and makes its decision after analyzing the every single data so that there is no place of such economic disruption in near future due to hasty and uncalculated decisions.
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