Money

[BobbyBobBob]

This is going to sound like a incredibly ridiculous question but I'm going to ask it anyway...........basically if the royal mint is where money is produced and we're in such hard times financially, why cant they just produce/make more money?

I'm guessing there's a logical explanation for this. I'm guessing it would de value the currency if more and more amounts were produced.

Silly question I know, it just popped into my head and I got curious.

[Maydup]

Give us a bob Bob.

[woofgang]

Yes you are right, if there was more money then each pound would be worth less, BUT they have been doing this a bit, google "quantitative easing"

[doctordb]

I've been printing my own for years, :)

[flump1]

Ok, so just suppose they print more money....now, who are they going to give it to ?

[rockyracoon]

They should give it to me, I'd spend it all and get the country back on it's feet, it would be a moral duty ;)

[erin-x]

This is what I don't get.

How can something that we created get the better of us?! It's like it's an unstoppable force of nature or something!

[Buenchico]

A pedantic point to start with:
The Royal Mint (in Llantrisant, Wales) only produces coins. Banknotes are printed by the Bank of England (or, more accurately, on behalf of the Bank, by De La Rue Currency in Loughton, Essex).

Printing extra money to try to solve economic problems is known as 'quantitative easing'. In modern times, where moving money around the world is done largely by simply altering the balances on computers (rather than physically moving the cash), it's no longer necessary to actually print extra banknotes; governments simply increase the balances shown in their books.

Many governments (including the present UK government) have tried quantitative easing to solve their problems. (Over the past few years, the Bank of England has 'created' billions of pounds of 'extra' money, doing exactly what you've suggested).

The problem is that money has to be backed up by gold (and other) reserves. Printing extra money (or juggling the figures on computers) doesn't change the value of those reserves; it just makes each pound worth less on international markets. That leads to rising petrol prices for our cars because we need to use more of our (lower value) pounds to pay for the fuel. It also increases the prices of all of our other imports, such as wheat (so bread prices go up).

If everything costs more, people can't buy as much, so our manufacturers can't sell as much. That can result in job losses for the employees of those manufacturers. So it's easy to make matters WORSE through quantitative easing if it's done to any great extent. (The Government's current policy is that it should only be a SHORT-TERM measure to boost the economy, with the extra money gradually being withdrawn from circulation later on to avoid the sort of problems I've mentioned).

If things really go wrong, MASSIVE inflation can occur. For example, we might expect prices to rise by anywhere between (say) 10% and (perhaps) 50% over a 9 year period. But in 1923 prices in Germany (where the government tried to pay off war debts by printing money) where 726 BILLION times those of 1914. (On a single day the price of a loaf of bread at teatime could be 20 or 30 times what it was at breakfast-time; people were having to fill wheelbarrows with banknotes just to buy a single loaf).

Chris

[Brinjal]

You don't have to go to Germany for an example look at Zimbabwe 5 years ago. The price of a loaf of bread escalated by the hour eventually we ceased to trade and the economy collapsed totally.

[wolf63]

Brinjal - are you still in Zimbabwe? Is that where you were born and bread (seemed to be the correct spelling of bred in context).