Questions tagged [currency]

a generally accepted form of money, including coins and paper notes , which is issued by a government and circulated within an economy.

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196 views

Why are European countries happy to be outside Eurozone?

In EU countries like Poland, Czech Republic, Hungary, etc, people are happy that they are not in Euro zone and Euro crises like that of Greece do not affect their economics. However, some European ...
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144 views

How Much Gold Did Weimar Have Pre-Hyperinflation?

A few years ago, Peter Schiff and a few other Austrians (not all Austrians, as Mish was stating the opposite) were adamant about hyperinflation and Paul Krugman stated that it was like talking about ...
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55 views

What's the point of adding security features to new bill designs?

What's the point of creating new bills with more security measures to prevent counterfeiting? (For example in the USA the new $100 bills have more security features). If the old bills are still ...
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45 views

Is an EU single currency still a trade advantage in 2019?

When the single currency was planned, there was no internet and there all currency exchange was manual. Today the web can automatically convert prices using multiplication of the numbers in the ...
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768 views

What is the relationship between S&P500 and the US dollar

In the recent past, both the S&P 500 and the USD (against other currencies) have appreciated a lot. From what I understand, if USD goes up against other companies, the major companies of the S&...
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42 views

why is the term fiat money or fiat currency and is it the same as legal tender or are there any differences?

I learnt some very basic economics learning about 2, 2.5 decades back. Recently, while reading some article on the web, I came to know about 'fiat money' and 'fiat currency' but have been unable to ...
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50 views

How does key currency work?

When a country make too many of their currencies, it will eventually lower the currencies' value and inflation would occur. But why won't key currency work like this? If the US is making more and ...
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3answers
179 views

Russian ruble drop in value due to low oil prices

http://www.americanactionforum.org/research/impact-falling-oil-prices-russian-financing/ Based on the above article, the author states that "For budgeting, this favors the oil exporter, because a ...
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1answer
36 views

How does the Federal Reserve reduce “excess reserves”?

Over the last few years, the amount of currency is circulation (and the corresponding liability on the Fed's balance sheet) has been growing; however, the asset side of the BS hasn't increased. By ...
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74 views

Why hyper-inflation?

I understand the $MV=PQ$ identity. I also understand the benefit for the government in some cases to having non increasing over time (even if high) values of $\Delta P$ (stealth tax & seigneur-age ...
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1answer
63 views

Why would a common currency such as the Euro that can't be devalued be incentive for banks to lend money to a country?

I'm reading an article that is claiming that when the Euro was created, banks began lending more money to countries than before because as the Euro is a common currency across many countries one ...
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1answer
135 views

Currency Value Formula

I recently have gained interest in the way currency value is derived in crypto-currencies and have researched the ins and outs of supply and demand. Is there a particular mathematical formula to ...
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240 views

Is it valid to compare cryptocurrencies by using their smallest divisible unit?

I'd like to compare the relative value (in USD) of three cryptocurrencies: Bitcoin, Ethereum, and IOTA. (See spreadsheet below.) Specifically, I'm comparing the price of each currency's smallest unit ...
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102 views

What does “the world's strongest currency” title mean for investors? [closed]

Kuwaiti Dinar shows up as the most expensive in the world. Does that mean I better invest in KWD (or the safe USD) instead of my home currency (IDR)? A little background: I am just an ordinary person ...
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1answer
464 views

Would a world-wide currency be a good idea? [duplicate]

While every country has it's own political ideals, enforcing laws and rules, in an ever more globalized world, I believe the idea of fragmented economy is limiting big growth opportunities while ...
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55 views

Why does a current account deficit contribute to making a country a “sitting duck” for currency speculators?

George Soros had this to say about the factors surrounding his famous short of the British pound: The U.K. had a large current-account deficit…, modest FX reserves and no capital controls to rebuff ...
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1answer
36 views

How does the Monetary base, Narrow money and Broad money affect inflation?

In a lot of countries (e.g. Hungary) the M0, M1, M2 and M3 all doubled, tripled or even quadrupled in the past 10 years. How does this directly affect inflation? Since just because M2 doubles, it ...
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63 views

If a fluctuating cryptocurrency becomes the new world coin, would it stop fluctuating?

An often mentioned criterium for money is that it should be a unit of account. It could be argued that cryptocurrencies don't satisfy this requirement. The argument is that businesses like bakers ...
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32 views

Data for currency crises

Dear StackExchange users, I am currently studying currency crises and for that I need data from 1980-2018. I have used data from IMF, OECD, BIS, WORLD BANK, etc., but I still have some missing data ...
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66 views

What are the advantages and disadvantages to a country's people when the national currency is the world's reserve currency? [duplicate]

Today, the world's reserve currency is USD. At the start of the 20th century, the reserve currency was the British Pound GBP. Using U.S as an example to narrow the scope, what are the advantages and ...
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161 views

Norway inflation and exchange rates

I am looking at Norway's economy, and I'm trying to make sense of some of the data I see. Norway's economy has a very close relationship to crude oil, and in 2014 crude oil had a massive drop. Looking ...
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217 views

what in real terms causes one nations currency to be more valuable than another?

I would like to understand in atomic terms what makes the value of one nation's currency change with regard to another. Read that, without citing complex terminology but in basic terms. Obviously, ...
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150 views

Value of the ruble in year 1825

Would anyone know how to find out the value of the Russian ruble in the year 1825, in today's (2016) US dollars?
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216 views

Conversion of GDP PPP International \$ 2005 into GDP PPP International \$ 2011

Essentially I have two different datasets that I'm trying to consolidate. One set of data comes from the World Bank Databank, and is a set of historical GDP PPP values for all countries expressed in ...
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1answer
65 views

Comparing currency prices

If I know that one USD buys 0.90 euros or 1.42 Australian dollars, can I reliably conclude that one Australian dollar buys 0.63 euros? (0.90 / 1.42) That seems to make sense. But would this be true ...
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Exporting inflation

One explanation I have read for the resistance of the dollar to inflation is that it is "exported" meaning that excess dollars go abroad and foreign use of the dollar increases, thus preventing the ...
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1answer
39 views

why the currency crisis must occur at time t0 when the pegged rate equals the shadow exchange rate [closed]

Explain why the currency crisis must occur at time t0 when the pegged rate equals the shadow exchange rate and not before or after t0. Suppose the crisis were to occur at a date before and after t0 ...
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Log deviation from steady state - understanding a journal paper

I hope a question like this is fair game on this website! I'm doing some research for my thesis, and have come across what seems to be a pretty simple model - two countries, A (representing the USA) ...
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2answers
156 views

Calculating the amount paid for a loan in today's dollars

So I was trying to figure out the amount paid for a loan in today's dollars using two different methods but they give me different results. I was hoping that someone could explain which method is ...
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34 views

Currency Denominations Affecting Prices

My question regards how currency denominations might artificially affect prices. For example, a baseball game that determines a good pricing scheme for parking would be charging 7 dollars per person. ...
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What is the chain of events that occur when oil price drops that makes the Canadian dollar lose value? [duplicate]

A large part of why the CAD has been weakening (against the USD) is because the value is crude oil has been falling, and Canada is a big exporter of oil. But this oil doesn't belong to Canada. It ...
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1answer
356 views

What is the difference between currency manipulation, and a fixed exchange rate regime?

China is labelled by some to be a 'currency manipulator', that is supposedly pegged to the US Dollar. What is the difference between currency manipulation and a fixed regime? Different motives? I ...
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3answers
576 views

Is there a good way of assessing an estimated absolute value of a currency?

If we want to figure out the strength of a currency relative to another currency, we look at the exchange rate between the two. However, I'm wondering what is the most accurate way of assessing the ...
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1answer
62 views

What will happen to the reserves at the Fed?

Banks currently have 2.7 trillion Federal Reserves that they hold at their Federal Reserve account. It's part of the monetary base and these reserves were created when the Fed purchased bonds in their ...
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140 views

How do economic and financial policies in government deal with cryptocurrencies?

Given the decentralized nature of cryptocurrencies like bitcoin and ethereum, how can centralized organisations like banks and the government create policies around it without changing the way ...
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1answer
394 views

What effect would destroying large amounts of physical currency have on government finances

India has recently recalled high denomination notes and asked people to deposit the physical currency in old notes in their bank accounts. People who have unaccounted wealth are resorting to ...
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1answer
52 views

Which currency is preferred when countries with different currencies purchase imports/sell exports?

For example, when a company in the United States sells goods to a company or distributor in China, does the U.S. company accept payment in yuan (which it then exchanges for dollars on the currency ...
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219 views

Soros shorting the pound

How did Soros make money by shorting the pound? When he sold the pound and made its price to decrease, he had to buy it back again to return the amount he borrowed, but doesn't buying the pound raise ...
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1answer
130 views

Why switch from Gold to Fiat

If I'm not mistaken, gold was used in early days of USA. Why did we switch to fiat, i.e dollar bills. Originally they were backed by gold, so why not keep gold? I'm just trying to understand basics ...
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90 views

Will Chinese yuan be a key international currency someday?

IMF adopted Chinese yuan as international currency the other day. Will Chinese yuan be a key international currency someday?
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1k views

Floating exchange rate and cost-push inflation?

I have a trouble understanding the following text from my textbook. I bolded the fragments that don't make sense to me. "Disadvantages of a floating exchange rate: A floating exchange rate regime may ...
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64 views

Is it theoretically possible for a singular national currency to exist under a free banking system?

Free Banking is a proposed monetary system, usually by Austrian Economists, as an alternative to the prevalent Central Banking system. Under this arrangement, commercial banks would issue their own ...
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364 views

On what basis, is currency created?

This is more like a homework question. I am quite a beginner. I would appreciate any help, preferably with less technical terms, that guides me in the right direction. I went through the Wikipedia ...
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1answer
79 views

Why exchange rates of national currency are usually stable, where as cryptocurrency like bitcoin and ethereum is highly volatile?

Exchange rate of national currency like US dollar or INR don't fluctuate much during a month or year, but the exchange rate of cryptocurrency like bitcoin is highly volatile even in a single day. What ...
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1answer
130 views

Facebook's Libra - Why would it vary in value

Facebook has come up Libra its version of crypto-currency. The unique feature of Libra is the "reserve" which backs Libra. The reserve is supposed to be held in stable global currencies (USD, GBP, ...
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119 views

The link between US debt of $250 Trillion dollars and “Promise to pay” on US Dollar currency

Giving background to my question: a prominent economist was discussing the problems of the US currency and predicting it's collapse, said the following: "...a currency is a store of value, it's a ...
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77 views

Given fractional banking and the multiplier effect, for every dollar in circulation, how many dollars in spendable money exist?

The fractional banking system, in a nutshell, allows banks to invest the money deposited in them, and then for whoever ends up with that invested money to deposit the money back into the bank, which ...
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112 views

What is preventing the United States from printing USD to buy up prized assets from foreign countries given that USD is the world's reserve currency?

USD is accepted all over the world. U.S can easily print USD to buy up the most valuable assets from all over the world. Ethics aside. What is preventing the U.S from doing so? What did I miss out?
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98 views

Can banks maintain Euro accounts if the country they're in leaves the eurozone?

If a country forcibly leaves the Eurozone, is it possible for banks within this country to maintain existing euro deposits? Or does leaving the eurozone mean those deposits are automatically ...
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72 views

what alternatives can possibly back a new currency

A currency can be backed by a trusted issuing authority, by a scarce resource or by the scarcity of its money base (eg bitcoin). Are there any other known working alternatives.