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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