Poverty is a serious problem in many countries around the world.

Many people have low incomes, few opportunities, and struggle to survive.

It seems like so many problems come from not having enough money.

So, you might wonder, why don't we just print more money?

Everybody gets rich, everybody's happy, right?

Well, this seemingly simple solution isn't as straightforward as it sounds.

In this video, we'll understand, why don't the government just print more money?

First, let's understand what happens when we print more money.

If you ask your parents or teachers, they will answer it will lead to inflation.

But what is inflation?

Inflation is when prices go up because there's more money, but the same amount of stuff to buy.

Our economy is based on the law of supply and demand.

When the supply is high and demand is low, then the price will go down.

But if the supply is low and demand is high, then the price will go up.

And that's called inflation.

And when inflation gets really extreme, it's called hyperinflation.

To understand more, let's use a simple example with bread.

Imagine a loaf of bread costs five dollars.

Bob, John, Alex, Jack, and Tony each have five dollars, and there are only five loaves of bread available.

So, each person can buy one loaf of bread.

The government prints more money and gives an additional five dollars to everyone.

Now, Bob, John, Alex, Jack, and Tony each have ten dollars, but there are still only five loaves of bread.

With everyone each having ten dollars, they want to buy two loaves of bread instead of one.

However, there are still only five loaves of bread, and the bakery can't produce more bread instantly.

The bakery sees that people are competing to buy the bread and think, people can afford to pay more, so let's raise the price to make more profit.

So, they just raise the price from five dollars to ten dollars per loaf of bread.

And it's just normal human nature to get more profit.

In the end, Bob, John, Alex, Jack, and Tony still only get one loaf of bread each, but now they pay ten dollars for it.

Why?

Because they have more money, but there are still only five loaves of bread.

Because everyone has more money, they are willing to pay more for the same amount of bread.

So, does printing more money make them richer?

No, it doesn't.

Because there's still only five loaves of bread.

Unless the bakery can make ten loaves of bread, the price will stabilize.

And does this make the bakery richer?

Also no.

Yes, at first they get more profit, but remember that all people have more money and competing to buy bread from all bakeries.

So, all bakeries also have more money and want to buy more wheat to make more bread.

But the problem is, wheat must be grown on fields, and as we know, fields are limited.

So, in the end, the wheat farmers can't keep up with the demand from the bakeries.

This will result in bakeries are competing to buy wheat and increasing the price of wheat.

As the cost of wheat increases, bakeries have to raise the price of bread even more to maintain their profit margins.

In conclusion, printing more money without increasing the supply of goods and services leads to inflation, where prices rise and the value of money falls.

This is why simply printing more money doesn't solve economic problems.

Now that you realize printing more money sounds like a stupid idea, and you're probably sure no country would ever do that.

Well, some countries actually have, and it ended in disaster.

Let's examine a few notable examples.

Number 1.

Weimar Republic 1920s So, after the German Empire lost World War I, the German Empire was abolished in a revolution, and the Weimar Republic was established as the new Germany.

The Weimar Germany was severely devastated by the war, with infrastructure in ruins and chaos all over country.

To worsen matters, the Allied forces imposed hefty war reparations based on the Treaty of Versailles, which also angered this Austrian painter.

The economy was in ruins, unemployment was rampant, and the government had no money.

In a desperate attempt to pay off reparations and cover debts, the government resorted to reckless money printing.

This led to prices skyrocketing at an alarming rate.

By November 1923, prices were doubling every few hours.

People needed wheelbarrows full of cash just to buy basic necessities like bread.

For instance, a loaf of bread that cost 250 marks in January 1923 skyrocketed to 200 billion marks by November 1923.

This hyperinflation destroyed savings and destabilized the economy, contributing to social unrest and led to the rise of this Aryan dude who would reshape history.

Number 2.

Zimbabwe, 2007 Zimbabwe, previously known as Rhodesia, was an apartheid country similar to South Africa.

In the 1980s, after the end of apartheid, Rhodesia was dissolved and Zimbabwe was established.

The new president, Robert Mugabe, was a strong anti-colonialist and decided to evict white landowners, redistributing the land to black farmers.

However, many of these new farmers lacked experience and training in agriculture, leading to a sharp drop in food production, rising unemployment, economic mismanagement, and international sanctions which plunged the and try to fix the economy.

This reckless printing led to hyperinflation, where prices soared at an alarming rate.

By 2008, Zimbabwe's hyperinflation rate peaked at an unimaginable 89.7 sextillion percent per year.

That's 89.7 followed by 20 zeros.

The Zimbabwean dollar became practically worthless, and people had to carry huge items like eggs.

Prices could double within a day or even within hours.

Number 3.

Venezuela, 2016 Venezuela has the largest oil reserves in the world, even more than Saudi Arabia.

As a wealthy oil country, Venezuela became heavily dependent on oil.

Before 2008, when oil prices were high, Venezuela was a rich country, selling lots of oil and money.

However, instead of using this money to develop their industries and economy, Venezuela provided a lot of subsidies to the people.

At that time, Venezuela's socialist government that took over all industries, controlled the economy, and didn't allow private companies to grow.

All the money was given out as subsidies, prices were fixed at very cheap rates, and making people happy.

Everything seemed fine until the massive drop in oil prices after 2008.

Venezuela, being overly dependent on oil, faced a severe drop in income and economic stability.

This was worsened by rampant corruption, low tax income due to the lack of private businesses, and economic mismanagement.

As a socialist government, they couldn't just stop or decrease the subsidies, as it would anger the people.

So, they continued the subsidies by printing more money.

This excessive printing of money led to hyperinflation, where prices rose incredibly fast.

The Venezuelan currency became worthless, with people even throwing it on the streets because it couldn't buy anything.

This example shows how printing too much money can have disastrous consequences, even for a country with valuable resources like oil.

Actually, it's not just these three countries that tried to solve their problems by printing more money and ended up with hyperinflation.

Other countries like Hungary and Yugoslavia have also faced similar issues.

From these stories, we can learn that printing more money might seem like an easy fix for poverty and economic problems, but it actually causes more harm than good.

The key takeaway is that simply creating more money without increasing production just makes prices more expensive.

So, why do people want money?

Because they want to use it to buy things they need and want.

But what's the point of having billions of dollars if there's only one loaf of bread, or worse, no bread at all?

In the end, you can't eat money, so the money becomes useless.

Then, you might ask, why doesn't the government print money just to pay foreign debt, not for its people?

When a country prints more money, it becomes noticeable to other countries through economic reports, currency markets, and inflation indicators.

Even if the new money is only used for foreign debt, it still increases the total money supply.

This makes the currency less valuable and trustworthy in the eyes of foreign creditors.

Foreign creditors won't accept devalued money because it reduces the value of the debt repayments they receive.

They might see this money as toy money and lose trust in the currency, harming the country's economic reputation and stability.

So, what's the correct solution?

Well, governments should focus on creating value.

This means investing in education, building infrastructure, supporting technology, helping businesses grow, and managing resources and the economy efficiently.

If there's a high supply with high demand, then prices will stabilize.

When the government supports businesses to produce more, businesses will hire more people, creating jobs, and products will become more common.

People who get these jobs can afford to buy products, and because they work hard to earn their money, they value it and are more mindful of their spending.

This helps to prevent wasteful spending and keeps demand in check.

And the sellers, even with high demand, can't just raise prices because the products are so common that there are lots of competitors.

People will be happy, and the country will be prosperous.

This is what some successful countries like Japan and South Korea did.

If you're interested in inflation, I'll explain more about it in another video.

If you want me to make other videos explaining these topics, please like and subscribe.

Thanks for watching.