Why Can't The FG Print More Money, And Share To The Masses? See Why

Why Can't The FG Print More Money, And Share To The Masses? See Why


Why can't the Federal government just print a lot of money and share to the masses? Most people have asked the question above. 

I will use the scenario below to explain. 

Imagine a scenario the Nigeria government decide to print a trillion Naira for each of her citizen. 

Everyone is happy, shoe makers, drivers etc are happy, they are now billionaires. Everyone will be moved to buy their dream house, buy every luxury they have dreamt about. 

A former driver, now a billionaire goes out to meet a property seller. He chooses a mansion with everything he could dream of, and the initial cost of the mansion is N100m. The start of the problem. 

Due to the excessive flow of cash, more people with same dream like the driver shows interest in the same mansion. 

There are 3 possible outcomes;

1. There will be a tough competition between the buyers. Each buyer will increase the initial price quote to have egde ahead of others. Not forgetting that the prospective buyers are all multi billionaires, the initial price of N100m will skyrocket to billions. 

2. The seller of the mansion realizes that the cost of commodity in the market have risen and he can't afford to get anything. And he realises that selling his property for N100m won't solve his problem. He then changes his initial quite from N100m to N25billion. 

3. The third outcome is that the seller of the property decide not to sell his property again since he also got the cash from the government and he does not need to sell anything again.

In the first 2 outcomes, there 2 things in common;

The price of items increases drastically. While the purchasing power remains the same. If one buy a bag of rice for N20 thousand, after the change (and surplus of cash in circulation) the cost will skyrocket to maybe about N20million for the same one bag of rice. The value of the good is still the same. But the price have increased due to inflation. Then what is the need to over circulate the currency, when the only thing that change is the amount of money but not the quantity of goods. 

In the case of the 3rd outcome;

The third outcome indicate the disadvantage of surplus of cash. As no one would want to engage in trade. Goods and services are rarely available. Availability of goods/services collapses.

For the government to manage the surge in the number of currency needed to make purchases as the cost of goods have skyrocketed, more money would be printed, hence citizens would need to carry truck load of cash to buy just a bag of rice. 

This is exactly what happened in Venezuela. A kilogram (1kg) of tomatoes now cost 5,000,000 bolivars. If you want to buy few pieces of tomatoes, you would need to carry 5 million. Then to buy one basket, you would need a truck filled with cash. 

Printing more money and circulating it won't solve the basic problems. It will rather cause more problems. Inflation!

Hyperinflation encourages hoarding of goods, and destroys purchasing power.

A toilet paper roll cost 2.6 million

More money in circulation, makes the currency to become worthless. Giving space for inflation. Which is certain to go out of control. 

This has happened in Zimbabwe and even Germany during the war. They tried to print more money to make their economies grow. And that was a big blunder. 

These are some of the reasons government of every nation fight to protect their currency against forgery to avoid over circulation thereby causing inflation and economic break down.  

In summary, if your present total net worth is N100 thousand Naira. And you can afford a bag of rice for N20 thousand Naira. If the Federal government print more money, and you then become a millionaire with a total net worth of N1 million, and a bag of rice increase to N200 thousand Naira, what has changed? Nothing really. The value of goods still remained the same. It's just the currency.

So instead of becoming a billionaire in Venezuela, it's better you manage your thousands in Naira. 

Any government that plans to print more money into circulation as a way to boost local economy, that government are planning to fail and bringing the country down. It has never worked and it will not work. Not everyone can become a billionaire. Do the best you can and live happily with what you have. 


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