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3 Reasons Why Countries Borrow Money Instead Of Just Printing Them.

Opinion.
The answer to the above question (the title of this article) is based on personal opinion of the writer although believed to be of help to both the government and private sector in financial decision-making, also to give more understanding of monetary policy to Economics, Banking and finance students in citadel of learning.



Countries borrowing money instead of printing them right at the printing and minting of their country might seem like an easier solution for countries seeking funds to better the lives of her citizens. 

However, there are several negative effects to this approach that make borrowing a more attractive and best option in many situations, for example:

1. Inflation: Printing more money without a corresponding increase in goods and services of a country ultimately dilutes the existing money supply. This will leads to inflation, this simply means that the value of each unit of currency will decrease, reducing its purchasing power of goods and services, and potentially harming everyday citizens.

2. Loss of Confidence: Uncontrolled money printing can erode confidence in the currency's stability, thereby discouraging investment and trade. This can further weaken the economy of the country and make borrowing even more expensive in the long run.

3. International Trade: Countries rely on foreign currencies for international trade, a business relationship or buying and selling of goods and services between one country and another. Printing their own currency might make it harder to obtain these other currencies, and this will hinder trade and international economic relations.

Venezuela for instance, is a good example of the pitfalls of excessive money printing. Facing economic disorder in the early 2000s, the Venezuelan government in their attempt to use policies of printing their own money to tackle the issue responded by printing massive amounts of bolivares to finance social programs. This led to hyperinflation, meaning rapid, excessive, and out-of-control general price increases in the economy, with consumer prices rising over 1 million percent in 2018. The economy collapsed, with shortages of basic goods, mass unemployment, and widespread poverty in the country.

Instead of printing money, responsible governments use methods such as borrowing, taxes, and economic reforms to manage their financial affairs. While borrowing has its own set of challenges, it generally offers a more sustainable and less risky approach than resorting to the printing money.

Let us assuming a country like Nigeria decides to option in printing of excess currency for the good of her citizens, you may go to market to buy a bag of rice for close to a million Naira, although that may not be the problem, the problem is that you will not still see the rice available for you to buy because it will be hoarded by the richest in the country. In the end, the economy would be recessed and the economy may totally be closed down for some time.

Is better to borrow than for a country to print money on their own, a good government will rather borrow money to finance goods and services instead of printing them.

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