Post
Topic
Board Economics
Re: Question about inflation and debt.
by
adzino
on 10/01/2020, 21:27:03 UTC
If a random country is in debt, is printing money a good way to pay it off at the expense of the citizens?

For example, lets say you owe an entity $100. If you print an extra $100 bill you pay off your debt, but unbeknownst to the entity the $100 that they lent you is now worth less.

Would the barter system be a good way of combating this?
Printing money randomly to pay off debt is never a good idea. Look how worthless the currencies of Zimbabwe and Venezuela was back then because of reckless printing of money. The inflation killed their economy! The more money you print,  the less valuable your currency becomes thus increasing the prices of goods and services causing heavy inflation in the country.
Barter system also won't be a good way to settle debt. Think about the imbalances they will suffer when weighing the values of different goods to exchange.