WHY CAN'T THE GOVERNMENT SIMPLY PRINT MONEY AND MAKE EVERYBODY A MILLIONAIRE?

In todays digital world, the government can easily deposit one million dollars in everybody's bank account and make us millionaires instantly. but it is not practically feasible. Why ? To explain it,I will go to an aid of an equation as usual. First let us understand the factors that constitute the equation.

1. M= Total amount of money supplied among the people. For our calculation, let us take M as 100 dollars. M is also the total amount of money present the economy.
2. V = velocity of money. That is, the number of times the M {100 dollars} is used {passed} among the people in year. In our case, let V= 10.
3. P= average price of a good or a service. Let it be 5 dollars.
4. T = Total number of transactions or number of goods and services sold and bought in a year. Let it be 200. T is also the indicator of economic activity.

M*V = Money supply * no. of times M used
Now the product M* V is the total annual spending by the people.

P*T = price * number of item sold and it is the total annual sales revenue.

Logically, annual spending must be equal to annual sales revenue.
M*V = P*T
100*10 = 5*200 [our example]
1000 = 1000

This equation is called exchange equation. some says, it is the corner stone of economy. Both the product MV or PT represents GDP, the gross domestic product. GDP is the total monetary value of all the finished goods and services within a country's border.

Now coming to our question, if huge money is pumped in, what will happen?
again M*V = P*T
Here we increase M. But V and T will not increase immediately because habits die hard. People spending and saving habits will not change easily. Hence P- price level should increase to balance the equation. So more money supply will lead to inflation of prices.
[If V and T are constants then M is proportional to P]

Huge money supply will lead to hyper inflation and the money will not be worth the paper it is printed on,
only hard earned money will keep our economy healthy.

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