RE:why cant govt: print rupee as much as they want
by rahul singh on Jun 19, 2007 09:52 PM Permalink
If the govt prints as much money as they want, the market would get flooded with rupee. Hence, value of ruppe would fall down. Simple Supply and Price funda!
RE:why cant govt: print rupee as much as they want
by Oh MyGod on Jun 19, 2007 10:04 PM Permalink
When RBI prints as many notes it wants to. Rs Will loose its value. Inflation Will Go Up. Demand N Supply ratio will b HIT. There will be MORE DEMAND n LEss Supply. Say if Govt Gives u RS 1 Cr in cash. U may go to the bunk n fill in bottles will petrol. If 100 ppl do it. petrol availability will come down. So the prices has to shoot up.
RE:why cant govt: print rupee as much as they want
by Ajay on Jun 19, 2007 09:52 PM Permalink
Sandeep,
The problem is not with printing money but what money does. pronting more money incleases money supply something refered to as M3. More money in the market means people have more to spend which means higher inflation. Printing more money ends up increasing inflation which negates the very reason more money was printed.
Economic theroy basically is about controlling this monet supply, so called M3. No matter what is done rate increases ar CRR - cash reserve ratio, it's all about M3.
