COLLAPSE

I've always heard that printing more money wouldn't solve poverty, but why? First off, the governmental institution that has the ability to create money is the Federal Reserve, alongside Congress. The Federal Reserve utilizes specific tools in order to regulate money creation within the economy. All these tools are used to manage the money supply, interest rates, and the overall economy. The tools utilized are open market operations, discount rate, reserve requirements, forward guidance, quantitative easing, interest on excess reserves, communication, and lender of last resort. When we think of printing more money we must stop and think about the basics of supply and demand. When there is too much supply of an item, the demand goes down. If the opposite occurs, the demand rises for said product. Then we must think the same way when it comes to money. The best way to combat poverty would be to find an equilibrium price that is satisfied.

According to Investopedia, "An increase in monetary supply would decrease the value of money." Using the formula M V=P Q would demonstrate that a larger money supply would only increase inflation. The quantity theory of money focuses on the direct impact of money supply changes. Which would Indirectly affect exchange rates. While the Long run of Purchasing power is the opposite of the Quantity theory of money. PPP focuses on the changes in price levels influencing exchange rates directly. Therefore, these two forces work hand and hand with each other.

Based on the research, providing money to people in poverty would just make the economy worst! Although in theory, it is a genius idea, It would cause more of a struggle in the long run due to inflation. Therefore, I would have to disagree with the idea that providing more capital for people in poverty would help.