How Printing Money Causes Inflation

How Printing Money Causes Inflation

How Printing Money Causes Inflation:
A Malaysian Perspective

Introduction

Inflation is one of the most talked-about economic topics in Malaysia today. But what role does printing money play in it? Let’s break it down in simple, relatable terms for everyone — from curious students to business owners.

💡 Did You Know?
Adding more money into the economy doesn’t make people richer — it makes the money worth less if there’s no increase in goods or services.

What Does "Printing Money" Actually Mean?

“Printing money” isn’t just about minting physical notes. It includes digital money creation by central banks to increase liquidity. In Malaysia, this is strictly controlled by Bank Negara Malaysia.

How It Leads to Inflation

1. Increased Money Supply

When more money is pumped into the system but goods and services remain the same, each ringgit buys less.

2. More Demand, Same Supply

People spend more because they have more money — but if shops can’t keep up, prices rise.

3. Inflation Takes Hold

Costs start increasing across the board — from roti canai to rent — and the value of savings declines.

Global Examples We Should Learn From

🇿🇼 Zimbabwe’s Hyperinflation

In the late 2000s, Zimbabwe printed vast amounts of money to fund government operations. It backfired, with inflation reaching 79.6 billion percent in 2008. People used wheelbarrows of cash to buy bread.

🇻🇪 Venezuela’s Crisis

Venezuela’s inflation skyrocketed to over 10,000% by 2019 due to excessive money printing. Citizens lost trust in the currency — many switched to USD or barter trade.

Malaysia’s Safer Approach

Malaysia has been cautious. According to the IMF 2025 Malaysia Article IV Review, inflation in Malaysia was just 2.0% in 2024, projected at 2.6% in 2025. Thanks to responsible fiscal policy and strict central bank regulations, we’ve avoided extreme inflation scenarios.

⚖️ Legal Note:
In Malaysia, only Bank Negara Malaysia can issue currency. Unauthorized printing or duplication is a serious crime under Malaysian law.

Conclusion: More Money Isn’t Always Better

While printing money may seem like a simple fix to economic slowdowns, it comes with dangerous long-term effects. From Zimbabwe to Venezuela, the lesson is clear — monetary stability is more important than short-term cash boosts.

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