Questions tagged [money-supply]
Use for questions primarily related to the stock of money, either narrow money (MB or M0), and broad money (M1, M2, etc). This can also be used in questions related to the creation of money by governments and central banks, including questions related to models with a money market like IS-LM, where the supply is of importance.
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By what steps and contracts does new money enter the economic system?
Like many noneconomists who read about economic history and finance, I always remain somewhat baffled by the opaque generation of currency under the federal reserve system. My understanding is that ...
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What happens to the money that the government is in debt from?
Since nearly all countries are in debt except for four (http://www.therichest.com/rich-list/rich-countries/the-only-5-countries-in-the-world-living-debt-free/), where does all the money that the other ...
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Is Quantitative Easing an asset-swapping or money-printing exercise by the Federal Reserve?
Shortly after 2008, there were prominent commentators such as Jim Rogers who called Ben Bernanke an idiot and condemn him for printing money. However, there were also articles that suggest ...
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When the Fed increases the money supply, does any of the additional supply go directly to the government?
When a central bank increases the money supply, how much of it goes directly into the government purse? Say for example:
The money supply is $150
The populace has $100
The government has $50.
If the ...
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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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How and when is M0 money created?
The Federal Reserve Coin and Currency Service Website
describes their currency order process thus:
The 7.2 billion notes included in the FY 2015 order reflect the Board’s estimate of net demand for ...
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How is the interest on fractional reserve money creation paid?
In fractional reserve banking commercial banks create money when they make loans. When these loans are paid back the account is zeroed, the created money disappears, but the bank is still entitled ...
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Using US foreign tax policy to offset a raise in interest rates
I am an amateur economist at best, more a person with an economic BS looking to explore data science (I will be using python). I have a theory that I want opinion on that will allow the Fed to raise ...
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What would be the effects of an expiration date on currency?
Let's say we introduce a monetary system where each piece of money is printed with an expiration date - a year, perhaps.
I'm imagining something rather different from inflation (although I do not ...
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How could monetary policy be affected if cash "gifts" to consumers were more frequently used?
A few years ago in the US, everyone who filed taxes received a check for $1000.
If this method of inflation was logistically more feasible, how could this be used in monetary policy, and what ...
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Are prepaid cards, and gift cards considered a form of money?
Are the followings considered a form of money
prepaid (debit) cards
gift cards (both bank-issued such as American Express gift cards, and store-issued such as Walmart gift cards) ?
Are their ...
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What prevents a bank from simply going into their computer system and adding some zeros to their bank account? [duplicate]
This question has been bothering me for a long time and I’m hoping that someone here can help to answer it.
I will use Greece as an example, but my question could really be applied to any country or ...
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Is money lent by central banks to private banks counted in MB or M1?
If a bank borrow money from a central bank but keeps it as a reserve instead of lending it to someone else, is it counted in the monetary base (MB) or money supply measure M1, using US definitions ?
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How would banking in UK change if minimum required capital to open own bank would be £100k instead of €5m?
DIRECTIVE 2013/36/EU
Article 12
Initial capital
Without prejudice to other general conditions laid down in national law, the competent authorities shall refuse authorisation to
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Where did the Greek cash go?
Apparently (1, 2) Greece is running out of cash right now. I am wondering where the cash went.
One option that I can image is people withdrawing funds and taking them out of the country but this ...
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How would banking in EU change if taxpayers withdrew their support for Deposit Guarantee Scheme?
Disclaimer
The question pertains mostly to EU but I believe counterparts to Deposits Guarantee Scheme exist world-wide.
Assumption
Let’s suppose that support for liberal ideas and free market rises ...
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Could money be tied to a basic good like the gold standard?
I don't have a formal education in economics but I had an idea for creating a better and fairer currency. So the gold standard ties gold to the dollar. Gold is usually used in luxury items like ...
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How is money created on net?
I have the impression that everyone has more net money than in the past. By net money I means cash + money lent to others - money borrowed from others. If this is true, where does the extra net money ...
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Destroying the dollar
Let's destroy the USD dollar: I am the government of a small, economically and geopolitically unimportant country that has its own currency and a local central bank. I order the local central bank (at ...
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Fractional reserve banking and the value of someone else's currency
Suppose there are two countries: $A$ and $B$. $A$ is a large, stable, democratic country with its own currency, the dollar. $B$ does not have its own currency. All prices and financial transactions in ...
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How does the money supply behave when bank loans are repaid?
In a fractional reserve system when banks lend out money, that money is created out of thin air by a accounting journal entry, and the money supply goes up by the amount of the loan & when the ...
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Why is fractional reserve banking allowed?
I learned about banks' fractional reserves and that revolted me. How is that not considered to be fraud?
The idea doesn't seem too sophisticated, on the contrary, it sounds very simple: the bank ...
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Reactions of the Money Market
Here's the image of a money market with two different money supply and demand curves:
Here are some questions regarding money market reactions. I'll always write my proposed reasoning underneath each ...
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How exactly do Participatory Notes induce volatility into the economy?
I was reading up on participatory notes. Wikipedia defines these as "instruments issued by registered foreign institutional investors (FII) to overseas investors, who wish to invest in the Indian ...
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What determines the exchange rate of two fiat currencies if the supply of each is known?
In this blog post, economist Steve Landsburg posed a question about the value of Bitcoin which he didn't know the answer to.
Imagine a future in which Bitcoins (or some other non-governmental
...
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Restricting "money creation" to the central bank [duplicate]
Iceland is considering removing "money creation" from commercial banks.
[Despite the date of the article, I don't think this is a joke, as it has been picked up in other places since without anyone ...
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How to determine the worth of a good
I've searched around the web for awhile now and I'm beginning to think this might be an unanswerable question. I want to know if there is a theoretical way to determine the worth of a particular good, ...
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How does a country increases or decreases it currency value (exchange rate) against other nations currency?
I want to know how a country, Mexico for instance, keeps the exchange rate higher or lower against other nations currency, USD, EUR, JPY. How does the value of a nation currency is valued against ...
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What if only the government could create money? [duplicate]
If I understand correctly, under the dominant system of fractional reserve banking, many (all?) private banks can create money by lending. See, for example, Implications of abolishing Fractional ...
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What effect would raising reserve requirements while printing money have?
It is generally accepted, that printing money will be inflationary, as it increases the money supply without a corresponding real growth of the economy.
At the same time, if the central bank ...
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Does the money's "Store of value" function actually exists?
I'm aware of the following four functions of money:
Medium of exchange.
Measure of value (in dollars, pounds, etc.)
Standard for exchanging goods (guaranteed by the Fed)
A Store of value (as an asset)...
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What impact did monetary policy actions taken during the Great Recession (2007-09) have on U.S. economic performance?
What impact did monetary policy actions taken during the Great Recession (2007-09) have on U.S. economic performance?
Quantitative easing and unconventional policy actions such as asset purchases and ...
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Unlimited supply of national currency?
I was reading this article about Denmark central bank defending its currency peg:
http://www.bloomberg.com/news/2015-01-22/denmark-cuts-key-deposit-rate-to-minus-0-35-to-drive-down-krone.html
In it ...
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Is Dollarization a good decision for a small open economy with an economic cycle that weakly correlates with the anchor country?
I have been reading the work of Alesina http://scholar.harvard.edu/files/alesina/files/dollarization.pdf, about the pros and cons of dollarization (i.e. adopting the currency of other country, say the ...
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What is the calculable effect of counterfeiting on an economy?
I'm curious whether one can numerically calculate the effect that counterfeiting has on an economy.
As I understand it, counterfeiting essentially amounts to theft of the wealth of everybody holding ...
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What is the advantage and disadvantage to have a high value of USD for USA?
What is the advantage and disadvantage to have a high value of USD for USA?
China and Japan always want to keep their currency low as oppose to USA.
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How might the Swiss currency floor be unwound?
The Swiss National Bank has been enforcing a currency floor since 2011, not allowing the EUR/CHF rate to drop below 1.20 by buying unlimited amounts of foreign currency as needed with newly created ...
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Implications of abolishing Fractional Reserve Banking on mortgages and interest rates
Suppose for a moment that someone with legislative power decides to abolish Fractional Reserve Banking and passes a law that forces banks to only lend the money they own, that is M0.
What would be the ...
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Inflation, cause or result of monetary emission?
The argentine economist Fernanda Vallejos, while trying to protect the government because of the inflation, the following:
Inflation is not the result but the cause of monetary emission. As
there'...
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What is the impact on the money supply of a reduction in the required reserve ratio? [closed]
In April 2011, the money supply was estimated to be 52 million hurls.
At the same time, bank reserves were 6.24 million hurls and the
reserve requirement was 12 percent. The banking industry, being
“...
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When and to what extent should the money supply of a pegged currency be included in the "parent" currency?
For example, the Manx pound is in a de facto currency union with GBP. The Isle of Man Bank chooses to back IMP one-to-one with Bank of England notes, but is not legally required to do so. At one-to-...
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