Can someone please find me a good site that discusses and answers the
following questions

 - When/why do we print more money? (not to replace old one, but ADD
more dollars to circulation)
 - What effects does that have on the economy of the country
 - What effects does that have on the worldwide economy

Here's some links that look at what might happen if all those overseas
US$ came home:


'AXIS of WEASEL' WAR, OIL AND the DOLLAR - Russian News Network
http://www.russiannewsnetwork.com/iraqcom03.html

Global: Bubble Trouble 
http://www.morganstanley.com/GEFdata/digests/20030827-wed.html

Commanding Heights : United States Money
http://www.pbs.org/wgbh/commandingheights/lo/countries/us/us_money.html

Taylor On US Markets and Gold
http://www.gold-eagle.com/gold_digest_03/taylor090803.html

Neat, yes that is the great concern, what about this large current
account deficit,budget deficit and national debt, and when is it going
to come and bite us back.

Thanks for the links :)

However what I am looking for is what economic indicator do fiscal and
monetary policy look for when printing money? What tells them 'ding
ding time to print money?".  What prevents them from simply printing
new money every month to pay the bills? What economic indicators keeps
this in check? e.g. What would happen to a nation if it simply kept
printing money and the world wasn't using its currency as a standard?
And then the same question, but with the US dollar in focus what is
preventing the feds from printing money left right and centre? Who
monitors the M4 reports and to what end?

So the simple question is, what is the economic theory behind the
factor(s) that trigger the printing of additional money.

Thanks!

Ok, firstly, the notion that the US Dollar is a world standard
currency isn't relevant to the question.

The short answer to your question "What economic indicators does the
government (or a government) use when assessing the propsect of using
money printing as an economic instrument, and not just a means of
replacing old notes?" is none and never. The usage of money printing
as a way of increasing the money supply and stimulating the economy
fell out of usage after it was shown that this is a highly
inflationary strategy to take.

The long answer is a little more complicated. Many economic models use
"the money supply" as an input to the model, and if these models show
marked gains from printing money, then the government may very well
partake in this. It is also possible to get a measure of the total
notes and coins in circulation, known as M1. But other measures of
'the money supply' are more popular, like M3, Broad Money, etc, and
these include various forms of bank credit and deposit facilities.

It is also worth doing a search on the credit creation process, which
is how banks expand the money supply using deposits and loans, even as
the physical notes and coins are fixed.

It is possible that the government would use measures like "notes for
destruction" and "population growth" to ensure that the money suplpy
remains relatively static. I would like you to note that no 1st world
nation is engaging in the systematic printing of money. This practice
is widely recognised as being the most destructive of all economic
instruments. Post WWII Germany had an inflation rate on the order of
thousands of a percent per month (I am not sure how this was measured,
given the lack of economic indicators prior to the great depression
and WWII).

Nethertheless, to answer your question as to WHY the printing of money
is so bad…

The printing of money increases the supply of money that consumers can
use to make purchases. However, the actual supply of goods for sale
does not increase, which leads to a price rise. This inflation 'hit'
that occurs with a sudden flood of money into the economy closely
matches the rise in money supply that caused it (%age for %age).

But inflation, especially prolonged high inflation, causes people to
desire holding money less. After all, the value of money is declining
by a rate equal to the inflation rate. This causes people to purchase
anything, so they can reduce their money holdings. This surge in the
purchase of consumer commodities causes prises to rise further. This
cycle is a hyperinflation cycle.

This hyperinflation cycle causes the exchange rate to fall
dramatically. This depreciation causes imports to virtually stop and
exports to grow rapidly, so we have a distortion in the Current and
Capital accounts.

The Capital Accounts will work in the reverse direction. Since we have
negative real interest rates, capital will flow out of the nation, or
a withdrawl of foreign investment and an outflow of domestic foreign
investment. (since the domestic real interest rate will be below
international real interest rates).

It isn't a pretty picture all around, I'd say, and this is why the
practice of printing money really isn't in vogue in economic
literature, and probably never will be.

Great answer, thank you, now how do I get google to give you the $4?

Healthy economy dictates that the amount of money in circulation is
equal to the amount of Gold in the country's vaults.  Simply priting
money causes little more then inflation.  If a country acquires more
riches from outside, more money can be printed...

The government does in fact "print" money, it works through a very
simple process, although there are a few permutations.

Very regulary the Federal Reserve Bank purchases government securities
from private individuals and corporations in the open market. The
dollars they use to purchase these securities are created out of thin
air. The fed can also sell bonds into the market which has the affect
of taking dollars out of the economy.

The essential economic indicator the Federal Reserve Bank *currently*
uses are the inflation figures. As long as Consumer Prices are rising
under 3 percent or so they will continue to grow the supply of money
at a modest rate. Other central banks arounf the world use different
indicators.

To answer one of your questions specifically "What stops them from
printing money to pay the bills?"; well basically whatever they think
they can get away with. There is a circuit breaker however. It takes
two parties to initiate money printing in modern governments. The
first is the government itself, it must issue debt in the form of
bonds. The second is the central bank, it must buy buy those bonds or
a portion thereof. This seperation of powers means that money printing
schemes are much more difficult to pull off. But make no mistake:
central bank purchases of government debt is "printing" money.

Hopefully this comment gives some insight even if it is a bit cursory
and disjointed.

http://www.federalreserve.gov/releases/Z1/Current/z1r-3.pdf

Here is a source to demonstrate my earlier comment. In 2002 the
"Monetary Authority"(Table F.1 ,Line 36)lent the markets 77.7 billion
dollars. The majority if not all of this lending would have taken
place through the purchase of government bonds. The Monetary Autority
refers to the Federal Reserve Board. So in essence the FRB printed
77.7 billion dollars in money. Ostensibly the US government is
responsible for paying back the FRB. Howver as long as the FRB is
willig to create new money this doesn't mean to much, but it is a
"check and balance". A 1920's style hyperinflation (Germany) is
probably not possible in the current system. Central banks can always
be "nationalized" though.