Central Banks Can’t Print Unlimited Money

C1 – Advanced

The advent of the COVID-19 pandemic in 2020 has caused a great shock to the global economy. Governments’ solution was to release huge amounts in the form of stimulus packages.

Perhaps the biggest question in everyone’s mind is, where was this money from? How come banks do not produce as much money as we need in times of need? Instead, their response is quantitative easing.

Though the monetary policy quantitative easing has become common in the recent years, it is still in its nascency and the governments and economies have yet to uncover the extensive scope of its consequences.

Learn more about quantitative easing and why central banks can’t print unlimited amount of money even during severe economic crisis.

Discussion Questions:

  1. Why can’t central banks just print unlimited money even if it is to help an economy in crisis?
  2. Explain quantitative easing, buying bonds, and treasury bonds.
  3. Treasury bonds are considered as a safe form of investment. What is your opinion on this?
  4. In your opinion, when central banks buy government bonds/debts, does it only undermine a system that is designed to protect the economy or do you think these measures are actually necessary and helpful in stabilizing economies?
  5. Talk about the economic relief packages by your government as a response to the pandemic crisis.
  6. Share your thoughts on this statement by John Kenneth Galbraith, “The process by which banks create money is so simple the mind is repelled”.
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2 replies on “Central Banks Can’t Print Unlimited Money”

Central banks can´t print unlimited money because it could produce inflation.

Instead of printing money, central banks buy bonds and treasury bonds to loan money to the goverments and then, it can be invested to boost the economy. This is called is quantitative easing.

I think the safer form of investment is purchasing treasury bonds because, it´s really dificult the bankruptcy of the government.

When central banks buy government bonds/debts, it helps to stabilize the economy without increasing inflation.

I think it was a good decision supporting the spanish economy with relief packages by government. My doubt is when it will be pay off the loans.

Glad to see you’re back to practicing your writing again!

Take a look at better words/expressions you can use in the following sentences:

Central banks can´t print unlimited money because it could produce inflation.

Central banks can´t print unlimited money because it could cause inflation.

This is called is quantitative easing.

This is called is quantitative easing.

I think the safer form of investment is purchasing treasury bonds because, it´s really dificult the bankruptcy of the government.

I think the safer form of investment is purchasing treasury bonds, because, it´s really difficult for the government to go bankrupt.

Until your next one!

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