Question: could you please explain in a nutshell exactly how and why ?

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Answer #1:

Because of inflation. Look it up on wikipedia. :)

Answer #2:

If each country printed out cash to pay it's debt's it would cause the 'value' of the money to decrease. Meaning the cost to produce things would needs to be increased and therefore the cost of selling things (inflation).
I'm not sure about the whole financial crisis but printing money would cause greater problems. History has shown this not be be a good answer to financial problems (Germany and Zimbabwe both did this).

It's called Hyperinflation

Answer #3:

Printing more cash and avalibility of more cash in market causes inflation.

Your assets and productivity distribution should be at per with the currency in hand of people, if it is disbalanced there will be inflation and finacial crisis.

Answer #4:

Money would become worthless, if we just printed it up when we needed it - although there is a point where this could be done if needed. But it dosn't happen often

Answer #5:

The main reason is because....

Most of the money in the world at any given time is tied into shares...

Shares have NO actual value, just a bid price that somebody is prepared to pay at that particular moment in time....

If people lose confidence in shares, then share price falls because people stop buying them...then the people that still own them need to sell them to try and stop themselve from more losing money (other than just what they lose by the intial price drop).

Throw in a failing housing market and everyone gets worried about losing money... then PANIC sets in...and all of a sudden everyone starts hiding money under there bed or buying gold etc

Add a sprinkle of banks with unrealistic business plans and all of a sudden banks start going bust because other banks wont lend them money.... then ALL banks get worried, start raising the rates that they lend money to each other and the economy grinds to a halt.

Mix all of these factors together and the economy goes into freefall...

...like what has been going on these last couple of weeks....





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