Does that make any sense to you? The U.S. is a Triillion dollars in debt yet we can make as much money as we want? What do you think about that?... Show More
Most Helpful Guy
Creating currency devalues the currency that is in circulation right now. If you would like to read up on it, look up inflation and hyperinflation.
The basic principle goes like this: If there is something of limited supply, then people know that not everyone can have it. So they strive to attain it before it runs out or is severely limited. On the other hand, if there is plenty of something to go around then people aren't as worried about getting it because they know it's not hard to come by. Same thing applies to currency. If there is a lot of it, then people don't feel the urgency to get it like they did before.
Also, when there is more currency in circulation, businesses know this and can get away with charging more for their products in order to get a bigger slice of the pie. So a person can end up with more money, but the price of goods and services also rises so everything stays relative anyway. If you earn $1 and bread costs $.50, that is the very same thing as you earning $100 and bread costing $50.
As for our recession, receding is the root word. It means that our national production, purchasing, credit, etc. capacities are drawing back while we have built ourselves to sustain up to a certain amount. So now we basically have a lifestyle that is built above our means since our economic system is drawing back, unable to cover what it did before. We are borrowing against other nations to sustain where we are now, but we are completely out of money.
That is the bare and basic way of explaining it, but it runs much deeper than this.