Often the question comes in the minds of the people that when the Reserve Bank of India has a note printing machine, then why does the government not print as many notes as he wants, if the government distributes crores of rupees to everyone, then everyone will be rich, poverty will end, unemployment will not remain. As it looks good as it feels, the reality is completely different and dangerous. Actually, the easier it looks like printing the note, the more the economic work related to it is as many. Many countries have made this mistake and the results have been very dangerous, the economy has been ruined, the value of the note has become like soil, and people have become indebted to eat. In such a situation, let us tell you today that if notes are printed in India, then why does the government not become rich by printing more notes, as well as how this currency system works.

Why does the government not become rich by printing more notes?

The government definitely has the power to print notes, but this does not mean that it can print as much currency as he wishes. Rubbing money is not just the job of planting ink on a paper. A whole economic thinking and system works behind this. If the government gives Rs 1 crore to every poor, then the prices of things of the country will be uncontrollable. The reason for this is that money will increase but things will not increase. Money is just a piece of paper, but its value is because the government guarantees that money. He maintains balance in the country’s economy. If the government prints more money, then that balance deteriorates.

How does the currency system work?

The currency of a country runs on the basis of its GDP. If goods and services are being made in the country, then only the currency of that country is valued. The number of notes that the government usually printed is equal to 1-2 percent of the country’s GDP so that the balance of goods and money is maintained in the market. If more notes are printed, inflation increases, the value of currency falls, foreign companies stop investing, and the country’s sovereign rating falls. Sovereign ratings can consider a kind of credit score of a kind of country. The better it is, the more cheap debt to the country.

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Often people will arise in the minds of the people that when the Reserve Bank of India has a note printing machine, why does it not print as much money as he wants and distribute to the people? If this happens, poverty can end and everyone can be rich. But the reality is completely different from this. It is easy to print the note, but the economic truth behind it is very deep. There are examples in the world where the wild printing of notes has ruined the whole country.

Why do not printed countless notes?

Actually, the economy of a country is not only running on notes, but is based on production, services and resources. If without printing notes and putting it in the market, then the availability of goods and services does not increase as much as the currency increases. This directly affects inflation and hyper inflation means a lot of inflation in the market. That is, the value of money starts falling and thousands of rupees may have to be paid for a bread. By doing this, two countries have been ruined.

Jimbabwe’s waste

The African country Zimbabwe is the biggest example of this. There the government continuously printed notes to complete the deficit and to please the public. After some time, the condition became such that a 100 trillion zimbabwe dollar note was printed, but even a bread could not be purchased. Inflation increased so much that people had piles of notes, but they had no value. After all, the entire economy of Zimbabwe collapsed and had to use foreign currency i.e. dollars there.

What was the situation in Venezuela?

Until the early 2010s, Venezuela was counted among the rich countries based on oil exports. More than 90% of the country’s earnings depended on oil, but after 2014, when crude oil prices started falling continuously in the international market, Venezuela’s economy started to be directly affected. The government had no money left to run expenses and meet social schemes.

To deal with this situation, the government resorted to printing notes on a large scale. Initially, the government there felt that this would solve the economic crisis, but gradually the supply of money in the market increased so much that the amount of currency increased many times more than goods and services. The flood of notes in the country created hyper inflation. By 2018, the situation deteriorated so much that the inflation rate in Venezuela went above 10,00,000%. In order to handle the situation, the government had to repeatedly re-dinomination of the currency, that is, the zero had to be removed from the notes, because crores of people in the country had to die of hunger.

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