Re: Could Someone Please Explain the Money Supply?
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It's still free money...for the lender.
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Its not risk free for the lender as your money only has value if someone else wants it. I can print up $10,000 in tolbiny dollars and try to buy my way into the ME but they aren't going to take it, so no one is going to come and borrow the $10,000t from me (and i have lost whatever it took to print it up). On a larger scale, lets say Zimbabwe since there is a thread going on them right now, if i print to much money no one will accept it and it becomes devalued heavily. When you try to pay people with it they rebel, go on strike, refuse to accept it, use other mediums of exchange (if you travel to zimbabwe everyone there will accept US $ or South African Rand (sp?), but no one wants the Zimbabwe dollar. So now the government (supplier of Z$) is losing power/influence and gerneally sucking all around. The supplier does not benefit without risk, but the wider the power he has (ie the more in demand his currency is) the more he can print without exposing himself to these risks.
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Even if 80% of my customers never pay me a dime, I get filthy rich just by getting business.
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If you are just printing money whenever someone asks then why would they ever accept it as payment? YOur dollars are worthless
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