Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? – Business (6)

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by TEYA: 11:00am On Oct 11

thesicilian:

Somehow makes sense.

Makes sense? Are you kidding me? That’s the way Idi Amin used to think that made the world to laugh at and mock him. Haba!

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by tunde4top(m): 11:05am On Oct 11
One thing you need to know is that this world is a global market where countries compete with one another daily.

Now after printing the huge money in Naira equivalent, what the government will spend the money on will directly or indirectly affect the international currency ($) which will lead to inflation and then worsen the economy.

1. Asuming that the money is locally spent here. The local people that got hold of the money will need to purchase goods with the money (now higher demands on the already shortage of goods available). The higher the demands of goods and stagnation in productivity will definately lead to increase in price which will indeed make life more difficult for the poor set of people. The only way that the government can mitigate these effects is to import goods produced in another country which will demand for a lot of $ from our our depleted reserve. Remember: We don’t have the rights or resources to print $.

2.If the government decides to bring in experts from outside to build some great infrastructural structures for us with the money. They will want to be paid in $. Even when they decide to get paid in Naira, they will in return later exchange it to $ equivalent. Definately, our $ reserve will suffer for this.

Can you now see why the government is requesting for loans instead of printing the Naira equivalent ?.

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by stagger: 11:06am On Oct 11

Only the Fed Reserve has the mandate to print its national currency. OP you should know this.

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by Brugo(m): 11:07am On Oct 11

francotunsco:
…and our money will become worthless! As if our money was worthful before. What is inflation self? Why are we running away from our shadow? A measure of Garri which used to sell for between 250 and 400 now sells for 1200 and we are running away from an imaginary inflation! Voodoo Economists!

I can’t help your ignorance. Swerve enter gutter abeg. grin

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by Evaberry(f): 11:07am On Oct 11

IamaNigerianGuy:

You might face the unwanted attention of the international community as to how you raised the money. Remember that each country has an account operated by the world bank, Bank for International Settlements and other financial institutions. You would also ‘pollute’ your legitimate funds with the fraudulent ones and cause your viability to be called to question.
Some countries practice what you advocate but they do so as a last resort and need to be very smart about it. It’s just much safer and foresighted to create value through production in the long term and borrow in the short term.

Wow I’m learning so much. following your comments and shares

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by emmie14: 11:09am On Oct 11

sorextee:
Very funny question.. Even the naira sef, we cant just be printing it anyhow..
it would lead to inflation, the money no go get value. more money chasing fewer goods.

Deflation nko

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by IamaNigerianGuy(m): 11:10am On Oct 11

Evaberry:

Wow I’m learning so much. following your comments and shares

You’re welcome! Glad to be of help.

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by danosky91(m): 11:12am On Oct 11
what do they use biko? so i will knw

eponoloyin:
The cost of printing nko? or you think it’s A4 paper they use

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by Jdesilentkiller(m): 11:19am On Oct 11

I am speechless…

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by chiefeconomist: 11:20am On Oct 11

Ebookmathswaec:
Why can’t we print the $5.5bn ourselves instead of borrowing since we can print money ourselves?

I believe if we print the money ourselves, we can use it for whatever we want and we won’t need to pay back money to anybody.

Nairalanders pls! I need explanation.

Your question was answered 300 years ago when Europeans thought more money means more wealth and prosperity for an economy. However, Adams Smith revealed that a country’s wealth is determined by its output and not gold or money. An individual will be wealthier by having more money. But what’s true for an individual is not true for the whole economy. If you print money to fund anything, you’ll have more money chasing the same quantity of goods and services which will raise prices (inflation) and make everyone poorer.
The most recent example of a country that printed money to fund government spending is Zimbabwe in the early 2000s. The end result was predictable: sky-high inflation (economists call it hyper-inflation). Due to the inflation, a teacher’s salary in Zimbabwe was 30 billion Zimbabwean dollars per week, yet she had to resign because it couldn’t transport her to work for the whole week. A bottle of coke was famously sold for 2 billion Zimbabwean dollars.
Surely Nigeria won’t want to repeat that experience don’t you agree?

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by sweetkev(m): 11:22am On Oct 11

Collyno82:
but borrowing it in oyinbo man’s currency won’t cause economic downturn abi. oyinbo man raping us & our economy since 1914
(

This economic things tire me self oo. I think Africa is not making use of her common sense

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by sweetkev(m): 11:24am On Oct 11

chiefeconomist:

Your question was answered 300 years ago when Europeans thought more money means more wealth and prosperity for an economy. However, Adams Smith revealed that a country’s wealth is determined by its output and not gold or money. An individual will be wealthier by having more money. But what’s true for an individual is not true for the whole economy. If you print money to fund anything, you’ll have more money chasing the same quantity of goods and services which will raise prices (inflation) and make everyone poorer.
The most recent example of a country that printed money to fund government spending is Zimbabwe in the early 2000s. The end result was predictable: sky-high inflation (economists call it hyper-inflation). Due to the inflation, a teacher’s salary in Zimbabwe was 30 billion Zimbabwean dollars per week, yet she had to resign because it couldn’t transport her to work for the whole week. A bottle of coke was famously sold for 2 billion Zimbabwean dollars.
Surely Nigeria won’t want to repeat that experience don’t you agree?

But if a nation borrow huge amount of money to finance her projects it won’t lead to inflation abi? We Africa have a very loooooong way to go undecided

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by Lectureradodo: 11:32am On Oct 11

In my own candid opinion, I think Der is more to printing money in any nation than d way I grammatically grammatically sound, cos if printing I money is dat easy, am sure all CBN governors would have been richer,

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by Klington: 11:33am On Oct 11

tillaman:
Ur kidding Right ?

No
Am not
They only print #5,#10,#20 and #50 here in Nigeria
Other higher denominations are imported.
Find out.

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by chiefeconomist: 11:46am On Oct 11

Lectureradodo:
In my own candid opinion, I think Der is more to printing money in any nation than d way I grammatically grammatically sound, cos if printing I money is dat easy, am sure all CBN governors would have been richer,

There’s a clear difference between the inflationary effects of legitimate government debt and reckless money printing. When the government borrows money, no new money is created as other economic agents give money they already have to the government. Yes, when the proceeds of that borrowing is used on recurrent expenditure, there is a clear inflationary impact, yet that is no where near what will happen with money-debasing printing.
Besides in this case, the borrowing is in dollars, from foreign economic agents, which will actually increase the nation’s reserves and help fund critical infrastructure.

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by chiefeconomist: 11:46am On Oct 11

sweetkev:
But if a nation borrow huge amount of money to finance her projects it won’t lead to inflation abi? We Africa have a very loooooong way to go undecided

There’s a clear difference between the inflationary effects of legitimate government debt and reckless money printing. When the government borrows money, no new money is created as other economic agents give money they already have to the government. Yes, when the proceeds of that borrowing is used on recurrent expenditure, there is a clear inflationary impact, yet that is no where near what will happen with money-debasing printing.
Besides in this case, the borrowing is in dollars, from foreign economic agents, which will actually increase the nation’s reserves and help fund critical infrastructure.

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by BanevsJoker(m): 11:56am On Oct 11

Ebookmathswaec:
Why can’t we print the $5.5bn ourselves instead of borrowing since we can print money ourselves?

I believe if we print the money ourselves, we can use it for whatever we want and we won’t need to pay back money to anybody.

Nairalanders pls! I need explanation.

You are the kind of person this Administration would appoint as both CBN Governor and Finance minister. Square Peg.

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by egbaguy2: 11:56am On Oct 11

so printing money,naira of course for nothing but infrastructural development would cause inflation? wouldn’t that improve the economy considering the ripple effect of infrastructural development projects that the money would be used for….abeg I am a BTech Chemistry holder. Forgive my economics illiteracy

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by TimeMod3: 12:01pm On Oct 11

Truckpusher:
And you had to point out a typo this Wednesday morning ?

I killed five people in Aba because of this grin

Aba? Home town of Python dance?
Until you have killed Python dance, nobody takes you serious.

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by buzzcypha(m): 12:02pm On Oct 11

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by Bunmiaji: 12:09pm On Oct 11

Ebookmathswaec:
Why can’t we print the $5.5bn ourselves instead of borrowing since we can print money ourselves? Uncle you want to cause inflation and undervaluation of currency

I believe if we print the money ourselves, we can use it for whatever we want and we won’t need to pay back money to anybody.

Nairalanders pls! I need explanation.

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by tinny898(m): 12:10pm On Oct 11
grin ;Dman u ar dam funni d guy is jz askin @least

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by Onyemabright(m): 12:13pm On Oct 11

The best morning topic in Nairaland

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by exlinklodge: 12:14pm On Oct 11

abescom:
China practically imports nothing. While countries like America buy plenty stuffs from China. America buys a lot of means when China devalues their currency, America have to pay more to buy from China.

Simply put – China de-valuate ( heir currency knowing a weaker yuan will boost their export against other nations that buy from China – including America which is why America didn’t like it as most of their deals are more EXCHANGE deals.

Switzerland did same when they de-linked their economy from the Euro.

For instance if 5 yuan equals 1 dollar. This means when China sells something worth 1 dollar to America they get 5 yuan but when the the yuan is devalued, to say 6 yuan to one dollar, they get 6 yuan for one dollar but when they have to buy from the yanks, they spend less. This logic however only works for a very productivity economy as China’s. They practically don’t have to import but instead export.

In Nigeria terms, imagine we have to export so much crude and don’t have to import much. We will buy making more money while spending less. China can afford it, Nigeria can’t.

Now I understand, thanks

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by Onyemabright(m): 12:15pm On Oct 11

[quote author=Bunmiaji post=61314643][/quote]U made my morning I love this topic

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by Aboguede: 12:20pm On Oct 11
All good explanations.

Expanded here,
for instance, there are two families in the world namely family A and family B. Family A is tasked or they are in charge of producing only female children while family B is tasked or in charge of producing male children.

Now remember the law of supply and demand which states that if supply is greater than demand, there will suppluss of the other so supply and demand has to be equall to keep balance as required.

Now family A which is in charge of female production has a problem to solve with money so they deceided to put out too much girls out for sale even morethan the people are demanding.

Now when the buyers notice that there are too much girls in tge market, they will start to price them lower so instead of 1 female equal to 1 male the buyers will price 3 girls in exchange for 1 male.

Now if this continue for long time, the females will continue to lose value till buyers will price 5 girls for onr male and then there will notbe comodity balance and before you know it people will not be buying girls again becus they have valueless and out of demand so the famale producer might not be able to buy anything becus he has nothing to give in exchange for what he need.

2 Likes

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by chiefeconomist: 12:36pm On Oct 11

abescom:
China practically imports nothing. While countries like America buy plenty stuffs from China. America buys a lot of means when China devalues their currency, America have to pay more to buy from China.

Simply put – China de-valuate ( heir currency knowing a weaker yuan will boost their export against other nations that buy from China – including America which is why America didn’t like it as most of their deals are more EXCHANGE deals.

Switzerland did same when they de-linked their economy from the Euro.

For instance if 5 yuan equals 1 dollar. This means when China sells something worth 1 dollar to America they get 5 yuan but when the the yuan is devalued, to say 6 yuan to one dollar, they get 6 yuan for one dollar but when they have to buy from the yanks, they spend less. This logic however only works for a very productivity economy as China’s. They practically don’t have to import but instead export.

In Nigeria terms, imagine we have to export so much crude and don’t have to import much. We will buy making more money while spending less. China can afford it, Nigeria can’t.

Your claim on China’s imports is incorrect sir. Last year China imported goods and services worth over $1.3 trillion (almost 3 times the size of Nigeria’s GDP). Based on economic principles, any country will benefit from a weaker currency eventually over the long run. Even if you are an import dependent country like Nigeria, a weaker currency will make imports prohibitively expensive, which will eventually encourage local production. For example, since the naira began to reflect its true value in 2016, practically no one imports things like eggs, toothpick, cooking oils and many other consumer goods. It will take time, but if we allow the naira at this low level long enough, I assure you more and more products will be produced domestically.

2 Likes

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by stilldoingokay(f): 12:38pm On Oct 11

sorextee:
Very funny question.. Even the naira sef, we cant just be printing it anyhow..
it would lead to inflation, the money no go get value. more money chasing fewer goods.

pls explain not understanding, and will it lead us to inflation

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by Eaa247(m): 12:42pm On Oct 11
base on the contributions so far i think this man’s question is a nice question, very good question.
Atleast some ppl have gone back to their basic economics while those that did not well in economics have learnt their lessons

@ the OP the simple is that more in circulation leads to inflation.

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by sorextee(m): 12:48pm On Oct 11
Dnt have energy to type much. But wull say a Lil.

If you print more money, the amount of goods doesn’t change. If there is more money chasing the same amount of goods, firms will just put up prices.

If a country prints more money, and inflation occurs, which is a sure thing, the money loses value against other currencies. Using Zimbabwe as a case study.
The kind of inflation I was talking about is HYPER INFLATION
My typing enregy fdon finish

stilldoingokay:

pls explain not understanding, and will it lead us to inflation

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Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by koladebrainiac(m): 12:50pm On Oct 11

sorextee:
Very funny question.. Even the naira sef, we cant just be printing it anyhow..
it would lead to inflation, the money no go get value. more money chasing fewer goods.

apart from it leading to inflation, imagine the cost of printing a naira note? how much it will cost to print each note of billion nairas?Think about it that way

Re: Foreign Loan: Why Can’t CBN Print The $5.5bn Instead Of Borrowing? by charlsecy: 12:55pm On Oct 11

exlinklodge:

But I don’t understand how China gains more by devaluing their currency since they are export based country.
Could you shade more light on that?

If an export-based country like China devalues her currency, their exports become cheaper abroad since fewer Dollar is now needed to get a given unit of their export. This will lead to even further increase in the demand for their export. With the devaluation of local currency, imported goods become more expensive, leading to a fall in their demand. So China uses devaluation to boost export and discourage import.

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