Unemployment - Creating Jobs
Why is it so hard to find a job?
Decreasing unemployment is simple in principle. All it takes to hire people is money. Money is just paper with numbers on it or electronic blips in bank computers. The government could easily print more money and use it to hire people who don’t have jobs. Governments have, in fact, tried this approach. At first the new money does the trick. New jobs are created and unemployment goes down. Unfortunately, long before the problem of unemployment is solved, prices start to go up. If the government tries to create enough money to keep unemployment low, prices start spiraling up faster and faster. The result is out-of-control inflation.
Out-of-control inflation causes all sorts of problems. Using money becomes difficult because its value is uncertain. You can’t hold on to money because its value falls too quickly. When you get your hands on money, you need to buy something of value that you can sell later. Buying and selling things you don’t intend to use is inconvenient. Worse, borrowing money becomes difficult because lenders don’t want to be repaid later in worthless money. Businesses that rely on borrowing money find it hard to operate. You can’t get loans to buy big-ticket items like cars and houses. The economy ceases to function if inflation gets out of hand.
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