Why does the US borrow money even though it has the right to print money?

A tricky question, but the answer is simple: because no one accepts your money outside of your country.

For other countries, to import goods, payment must be made in US dollars - this is called “foreign currency”. If there are no dollars in the pocket, the only option is to borrow or buy on credit.

But the US is different. Because the dollar is used globally, the US can print money and spend it around the world. However, printing indiscriminately is also not allowed - if too much is printed, the dollar loses value, causing global inflation, and eventually, the US itself suffers the consequences.

Classic example: Zimbabwe under Mugabe

• 1980: 1 USD = 0.678 ZWD
• 1997: 1 USD = 10 ZWD
• 2006: 1 USD = 500,000 ZWD
• 2008: Inflation reached 220,000%

Mugabe kept printing money to pay the debts of veterans, and then inflation soared. In the end, people had to pull carts of money to buy a loaf of bread. In 2009, the fourth generation Zimbabwean dollar was exchanged for 1 quadrillion dollars of the third generation.

Lesson: Money is not the solution. The price of money is determined by supply and demand, just like any other commodity. For money to have value, you must balance the supply of money with the actual demand of the economy.