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Why Governments Can't Just Print More Money to End Poverty

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Why Governments Can't Just Print More Money to End Poverty

Printing money and inflation
Distributing printed money sounds like a shortcut to solving poverty—but it actually triggers catastrophic inflation and economic collapse.

Why don’t governments just print more money and give it to the poor? With over 25 million Indonesians living below the poverty line (as of 2019), the idea may seem appealing at first. But history and economic science reveal that this well-meaning thought could wreak havoc if implemented.

The Historical Fallout of Printing Money

Case 1: Hungary's Post-War Hyperinflation

After World War I, Hungary's economy was in ruins. In an attempt to recover, the government began printing large sums of money. Initially, 1 USD equaled 5 Kronen. But by 1924, it skyrocketed to 70,000 Kronen. That’s a 1,400,000% depreciation in a decade.

It got worse post-World War II. Hungary adopted the Pengö, and again, flooded the economy with printed money. The result? A record-breaking hyperinflation where prices multiplied from hundreds to trillions in mere months. Daily inflation peaked at 150,000%. Workers had to renegotiate salaries every single day just to survive.

Case 2: The Gold Flood by Mansa Musa

In the 14th century, Mansa Musa of Mali, the wealthiest man in history, traveled to Mecca with 20 tons of gold. Along his journey, he generously handed out gold to the poor. However, this influx of gold devalued its worth across North Africa and the Middle East. Prices soared, and the local economy took a decade to recover.

“Good intentions don’t always lead to good outcomes.”

Why Printing More Money Leads to Inflation

The Basic Economic Principle

When a government prints excessive money and distributes it widely, the money supply increases without a corresponding rise in goods and services. The public gains buying power, demand rises, but supply stays the same. As a result, prices surge—a phenomenon called inflation.

The Lebaran Analogy

Every year during Lebaran (Eid), Indonesian inflation spikes. Why? People receive holiday bonuses (THR), leading to higher consumption. Since supply is limited, sellers raise prices. Now imagine that effect multiplied by 1000 if the government were to flood the market with printed money!

  • More money in circulation = higher consumer spending
  • Limited supply = vendors increase prices
  • Result: Devaluation of currency and runaway inflation

What Really Happens When Currencies Lose Value

Let’s say your salary is IDR 5 million today. If inflation spirals, that same amount might buy only a week's worth of groceries tomorrow. The psychological effect is worse: people lose trust in money, and the economy spirals into chaos.

So, while the idea of simply printing money to eliminate poverty may sound compassionate, the economic consequences are devastating. Responsible monetary policy must take into account inflation rates, economic growth, production capacity, and public trust.

Conclusion

History warns us: flooding the economy with money doesn't enrich a nation—it destroys it. Eradicating poverty requires sustainable strategies: job creation, education, social programs, and investment in human capital—not shortcut solutions like printing cash.

If you're curious about inflation and other financial topics, check out the linked resources below and explore more on the “Ngomongin Uang” channel.

Let’s discuss! Share your thoughts in the comments—what’s a better way to reduce poverty sustainably?

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