Andre LaRenzie, Chapter 10, Question #6

As a child I always thought, "Why can't we just print off more money to satisfy the needs of the poor population from around the world?". This is a misconception that many children I am sure dealt with. Also, with my parents being uneducated with Economics, I was never given an answer until we read Chapter 10 of "Naked Economics". Chapter 10 deals with the Federal Reserve, and how they regulate the "money supply" and "credit tap". There is a passage early on in the chapter that answers the question above. Charles Wheelan explains that if the Federal Reserve cuts tax rates and create a lot more money, then inflation will occur, and making it impossible to supply the poor population with money. When new money is created, high demands for products arise, and the companies are unable to keep up with the demand, so the only option would be to raise prices. Now this would keep happening if money kept on being created. The economy would be a disaster. So because of chapter 10 in "Naked Economics", I am finally relieved, and illuminated by being educated of how the Federal Reserve regulates money, and how it is impossible to create money for the poor. At least my ambition and selflessness were in the right place, just not my logic.