Suppose USA goes to Mexico and asks for crude oil. Mexico says ‘100 dollars’. USA goes inside its house, prints 100 dollar bills and gives it to Mexico and buys the oil barrel. Later Mexico says, 120 dollars and USA goes inside, prints 120 dollar bills, gives them to Mexico and takes the oil barrel. What does USA lose ? A little effort of printing, ink, paper, etc. Practically oil comes free. Then why can’t USA sell gas a t say 1 dollar a gallon ?
Mark, USA prints 1 trillion USD every year which equals the cost of oil.
dfgoodwin: gold standard was withdrawn by the great economist richard nixon in 1971.
We can print this money and send it overseas, and then other countries end up with giant storehouses full of USD.
The problem is, spending the USD causes inflation in the United States (which is the obvious conclusion to this commodity bubble).
China has billions of dollars sitting around, and if they were to spend them or convert them into Euros, they would plunge the American economy (which isn’t good for them because nobody would buy there goods).
I hoped that helped.
Why CAN’T USA PRINT MORE DOLLAR BILLS TO PAY FOR CRUDE OIL AND SELL GAS DEAD CHEAP ?
7 Responses to “Why CAN’T USA PRINT MORE DOLLAR BILLS TO PAY FOR CRUDE OIL AND SELL GAS DEAD CHEAP ?”
That’s what the US has been doing. They’re printing dollars and borrowing money. This is causing an inflation and eventual recession.
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Mark answered it pretty well.
Printing more money makes the rest of the money out there worth less. Hence, inflation.
Also, you won’t be able to beat Mexico in your scenario, because exchange rates between countries are tied to the value of the dollar. Exchange rates will equal out to you paying the same rate.
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They are already printing money that they cannot cover, that’s part of the National Debt.
You think there is that much gold to cover the amount of money in circulation?
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We can print this money and send it overseas, and then other countries end up with giant storehouses full of USD.
The problem is, spending the USD causes inflation in the United States (which is the obvious conclusion to this commodity bubble).
China has billions of dollars sitting around, and if they were to spend them or convert them into Euros, they would plunge the American economy (which isn’t good for them because nobody would buy there goods).
I hoped that helped.
References :
How much is your dollar worth? Make gas that cheap and you’ll be without a job! The petroleum industry has the world by the throat and the whole problem is one which we’ve overlooked for a million years, "HUMAN NATURE!"
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Increasing the money supply greatly makes every other U.S dollar worth less and this can cause inflation or even hyperinflation. Also if other nations lose its trust with the U.S Dollar than they wont expect it for payments and will switch to other currencies like the Euro.
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It doesn’t work like that.
Printing more would just reduce the value of the dollar, effectively making everything more expensive, so what would be the point?
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