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If a new country is to come to existence as a thought experiment, what determines the amount of money that would be needed to bootstrap economic activities?

This question is more of a prodding question in my quest to have a deeper fundamental understanding of what money is.

Basically if I am to understand money at a more fundamental level, what more fundamental level is there but to start from a clean slate: That is a new country coming into existence.

In such a scenario, what amount of money would be printed and released into circulation? What determines the amount?

Answers will be appreciated!

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  • $\begingroup$ Please clarify your specific problem or provide additional details to highlight exactly what you need. As it's currently written, it's hard to tell exactly what you're asking. $\endgroup$
    – Giskard
    Jul 5, 2022 at 0:22
  • $\begingroup$ @Giskard I updated the question to elaborate more on what I am asking. Hope it helps? $\endgroup$ Jul 5, 2022 at 7:48
  • $\begingroup$ Hi! Unfortunately the problem is with the word "should". There is no inherent "should" without an explicit goal, and "to boostrap economic activities" is not very clear. IMO it is more likely that you can get a thorough understanding about the role of money in the economy (which, mind you, is debated even among economists) from a book than from an SE post. $\endgroup$
    – Giskard
    Jul 5, 2022 at 8:44
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    $\begingroup$ If you want to ask the question using should then answer is any amount of money between 0- infinity, should imply this is a normative question. From a perspective of someone thinking money is immoral answer would be zero, despite the inefficiency of barter. If you want this question to be answerable in objective economic terms as opposed to moral philosophy you have to phrase it in a way what amount of money would be optimal to let’s say maximize total welfare, output or growth otherwise the answer is any amount between 0 and infinity based on your moral philosophy $\endgroup$
    – 1muflon1
    Jul 5, 2022 at 14:09

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I am assuming you wish the currency to be fiat. I will also assume that the population will all be assigned some amount of this new currency to start with. Under these circumstances any amount will do just fine. Perhaps crazily large/or small amounts would necessitate the population be numerate enough to process extremely large/small numbers.

But now on day one you have the problem that people will have little idea of what the currency is worth in terms of goods and services. How much should they offer for other people's goods? and how much should they charge for their own produce? It's a kind of chicken and egg situation. How a stable value emerges for a fiat currency is not well understood (and not much studied) amongst economists. A paper that examines the issue is => here.

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