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Questions tagged [money]

any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context, or is easily converted to such a form. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, sometimes, a standard of deferred payment. Any item or verifiable record that fulfills these functions can be considered as money.

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31 votes
8 answers
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If no one knew about inflation, would inflation take place?

I’m not an economist and would like some insight into this thought experiment. If people, the news, social media, etc. suddenly stopped talking about inflation, would inflation still take place? ...
GMoss's user avatar
  • 421
28 votes
10 answers
13k views

People pathologically hoard so much cash that they impoverish the entire nation

"If a man has an apartment stacked to the ceiling with newspapers we call him crazy. If a woman has a trailer house full of cats we call her nuts. But when people pathologically hoard so much cash ...
Bob L.'s user avatar
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22 votes
4 answers
9k views

Why is bartering uncommon in modern countries?

Recently, I witnessed two acquaintances of mine engaging in bartering, where one traded his services for the services of the other. Both services had about the same value. By trading them directly, ...
Bart's user avatar
  • 323
21 votes
7 answers
21k views

Why do different countries have different currency?

Why do different countries have different currency? I have this question because I want to know why to divide it? If it's not divided then we can easily use the money anywhere and we won't need to ...
user avatar
21 votes
5 answers
5k views

Can inflation occur in a positive-sum game currency system such as the Stack Exchange reputation system?

As most active users of this site know, the way the reputation system works is that everyone starts out with 1 reputation and a user can earn more reputation by asking good questions and writing ...
Jodast's user avatar
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16 votes
12 answers
6k views

Is money we make completely taken away by taxes?

In my opinion, any money we make will be completely taken away by taxes. Here is my logic. When I earn some money (x), I have to give some as tax to the government. ...
Tamila Ambeon's user avatar
16 votes
2 answers
13k views

In today's money, what was the value of a 1492 Spanish maravedí?

Satava (2007) estimates that the costs of Columbus's 1492 voyage was 1,765,734 maravedís. In today's money, what was the value of a 1492 Spanish maravedí?
user avatar
12 votes
8 answers
11k views

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 ...
kram1032's user avatar
  • 221
11 votes
1 answer
1k views

Wouldn't abolition of cash give rise to a substitute currency?

Some countries (e.g. Sweden and Denmark) plan to abolish physical cash in the future and restrict the use of cash to electronical deposits. One of the reasons for this is to prevent hoarding / boost ...
proskor's user avatar
  • 345
10 votes
4 answers
420 views

What is money really?

Say I have €1000 (or $1000) on a bank account. What is that money really? Is it a value stored on some computer at the bank where I have the bank account, a value stored at the central bank of the ...
Kevin's user avatar
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10 votes
3 answers
2k views

Money in the animal kingdom

Animals living in packs must have ways to decide how to distribute their goods among the pack members. Just like prices can appear in an exchange economy, prices could appear in pack economy. Though ...
JJ O's user avatar
  • 201
10 votes
6 answers
1k views

Is money a conserved quantity?

Excuse the naïve question, but I have a rather limited understanding of economics, and this question has been bothering me since my school economics teacher couldn't answer it satisfactorily many ...
Anasta's user avatar
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9 votes
2 answers
479 views

The Printing of Money for Paying Debt

I know that printing money causes inflation, but what if we print it to pay back our debts? For example, we have N dollars of debt to China. We can just print the N dollars and give it to China. ...
MehranJ's user avatar
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9 votes
3 answers
389 views

Would a fair distribution of wealth from the super rich increase the purchasing power/life quality of the average person?

I will start by saying that I do not have any background in finance and that the following question might be very much naive, but it has been bugging me for a while now. The general narrative seems to ...
Mark's user avatar
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8 votes
2 answers
1k views

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 ...
Kinnard Hockenhull's user avatar
8 votes
3 answers
4k views

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 ...
rohrl77's user avatar
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7 votes
5 answers
1k views

How can the stock market keep growing indefinitely?

It sounds like a dumb question, but there is only so much money in the world. Assets can grow, but money can only be printed. So if there is 400 trillion dollars worth of money in the world, and the ...
Will Kanga's user avatar
7 votes
1 answer
28k views

How much money is wire transferred every year worldwide?

How much money is wire transferred every year worldwide? Estimates are fine.
B T's user avatar
  • 587
7 votes
4 answers
660 views

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 ...
Petite Etincelle's user avatar
7 votes
4 answers
6k views

Why can't a government print money to pay its debt?

I have written an explanation to one of the famous questions "why can't government print money to pay its debt". Is my explanation correct? Is this the similar situation which happens in ...
karthiksatyanarayana's user avatar
7 votes
1 answer
464 views

What is the connection between the money market and loanable funds market?

I am studying economics with Khan Academy and came across these 2 articles on The money market and The loanable funds market. (LF = Loanable funds) Now, clearly these 2 systems must be related, right? ...
pjq42's user avatar
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6 votes
2 answers
1k views

Is money capital?

The Oxford English Dictionary defines "capital" as n. economic goods (e.g. railways, ships, machinery, buildings) destined for use in production (as opposed to consumers' goods). Historically, the ...
Geremia's user avatar
  • 471
6 votes
3 answers
616 views

Why are the financial intermediation theory of banking or fractional reserve theory of banking still accepted despite evidence to the contrary?

In most textbook economics I came across the financial intermediation theory of banking and the fractional reserve theory of banking are presented as theories as how money is created. However there is ...
CuriousIndeed's user avatar
5 votes
2 answers
7k views

Why is the money supply perfectly inelastic?

From my notes: We analyze the determination of the interest rate using a supply/demand model relating the interest rate (price of money) to the quantity of money. Since we assume: 1) no excess ...
Long Vuong's user avatar
5 votes
2 answers
295 views

Do general equilibrium models include money?

An economics professor told me that General Equilibrium models are a sophistication of barter. Does that imply that they don't include money? And if that is the case, are there any attempts to include ...
numberfive's user avatar
5 votes
3 answers
984 views

Is money mostly created (out of nothing) by banks making loans?

In the Bank of England's Quarterly Bulletin, 2014 Q1, McLeay, Radia, & Thomas write a pair of articles titled: "Money in the modern economy: an introduction" and "Money creation in ...
user avatar
5 votes
2 answers
229 views

Under the gold standard, how did the redemption of gold work in practice?

For example, in the US: In 1834, the United States fixed the price of gold at $20.67 per ounce, where it remained until 1933. (EconLib) Does this mean that anyone with US\$20.67 could walk up to ...
user avatar
5 votes
1 answer
505 views

The paradox of IOU

If money is just an IOU then the initial creation of money contradicts this assumption, doesn't it? A central bank doesn't owe money to any other entity (national central banks or commercial banks) ...
BlankerHans's user avatar
5 votes
1 answer
10k views

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 ...
Tim's user avatar
  • 221
4 votes
5 answers
2k views

Gold coins as currency?

My question is about gold standard. But not the version I always see mentioned (trading bills for gold at a set price). I mean having gold coins in circulation. For example, new currency consists ...
Guest's user avatar
  • 149
4 votes
2 answers
943 views

How is money destroyed when banks issue debt?

Bank of England (2014): Money can also be destroyed through the issuance of long-term debt and equity instruments by banks. How is money destroyed when banks issue debt? Say Bank X issues a £100 10-...
user92011's user avatar
4 votes
3 answers
299 views

In which country does my money have the largest purchasing power?

To be honest i have literaly zero economic knowlegde so please treat me as a noobie in this case. Here is the questin: I live in Poland where my native currency is polish zloty (PLN), and i want to ...
user2981093's user avatar
4 votes
4 answers
551 views

Why does an economic slowdown lead to deflation?

Usually economists say that in recession there is deflation, so increasing the money supply does not lead to a high level of inflation. According to the Quantity theory of money, the price level is ...
curiousTrader's user avatar
4 votes
3 answers
261 views

Is it reasonable to consider government bonds as money

Some measures of the money supply include governments bonds... but I wonder to what degree governments bonds can be considered money. IMHO the degree to which X can be thought of as money equals the ...
Mick's user avatar
  • 1,046
4 votes
3 answers
184 views

How can you know which is the "current dollar value" of a dollar value from another decade?

Is there a mathematical ecuation or some method, which allows you to have the "current dollar value" of an amount dollar from other year, let's say, decades ago? For example, it's said that the ...
Pablo's user avatar
  • 545
4 votes
1 answer
3k views

Best resources to self-educate myself in economics

I want to learn Economics by myself and I'm looking to build a path with people who're in this field to how and in what order should I learn Economics, I did some research and I've found many ...
Space_Monkey's user avatar
4 votes
5 answers
9k views

Why does a decrease in interest rate reduces the velocity of money circulation?

I have seen sources that claim high interest rates increase the velocity of money circulation, but haven't really seen any concrete explanation for this. This is how I think it works: High interest ...
tsp216's user avatar
  • 675
4 votes
1 answer
156 views

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 ...
Jem Bishop's user avatar
4 votes
3 answers
191 views

Why would a CBDC (Central Bank Digital Currency) be good for the economy?

I've read about CBDC, how it could be a cryptocurrency like digital payment system, that could replace fiat currencies. But what I don't get is what value would it give to the economy? Someone who ...
curiousTrader's user avatar
4 votes
3 answers
228 views

Real Income and a Fixed Money Supply

What would happen to nominal income and wages if the money supply were fixed (100% reserve banking). Would real wages increase, even though nominal wages would stay the same or even decrease?
Setrotoxin11's user avatar
4 votes
0 answers
80 views

How Africans use their wages?

I was researching poverty in Africa and was reading about their daily wages. Based on the article linked, 2/3 of Africans live on less than $1.25 USD, a day. However, what this article and many ...
F16Falcon's user avatar
  • 141
4 votes
2 answers
630 views

Why does every electronic transaction of USD legally take place on American territory?

In an article of a respected German newspaper (Die Zeit) I found the following statement (translation by me): 90 % of all foreign exchange trades are dealt in USD. Since every electronic ...
LittleD's user avatar
  • 41
3 votes
5 answers
1k views

Why does fiat money have value?

Or as Tobin (1992) put it: "How Can Money Have Positive Value in Exchange?" Money, however, is an embarrassment to value theory. According to standard theory, something can have positive ...
user avatar
3 votes
2 answers
265 views

How can all the bitcoin in the world be worth more than McDonald's Corporation?

What makes bitcoin so valuable? It has already surpassed the value of almost all publicly traded companies. I understand it can be used to buy things like digital money but why does the price go up? ...
user avatar
3 votes
4 answers
1k views

A bank approves a loan: where does the money come from?

In the naïve picture of the banking system, banks strike a balance between savings invested in them by savers and the loans requested of them by borrowers. The money loaned to borrowers is the same ...
JCW's user avatar
  • 147
3 votes
3 answers
93 views

Why doesn't Nintendo fire up the old factories and re-produce *exact* copies of many of their most popular games, controllers and consoles?

Let's suppose that Nintendo announce tomorrow that they are going to create exact re-releases of the American and European NES, SNES and Nintendo 64 consoles, exactly the same as when they were ...
Nacari L.'s user avatar
3 votes
1 answer
75 views

Was there any currency backed by other metals than gold, silver or copper?

Was any other metal than gold, silver or copper ever in history used to back a currency?
Ezekiel's user avatar
  • 506
3 votes
1 answer
580 views

What is an IOU?

I'm reading a paper right now that refers to divisible and one-period IOUs, but doesn't explain what the shorthand stands for. I understand it's a unit of payment, and guess that is the same "thing" ...
FooBar's user avatar
  • 10.7k
3 votes
4 answers
2k views

"Demand for money" - definition

What is the definition of "demand for money". The definition given by Wikipedia appears gibberish to me. And just to double check - what are the units of demand for money? Is it measured in "dollars"? ...
Mick's user avatar
  • 1,046
3 votes
2 answers
862 views

What is the difference between money and currency?

Is money an intangible concept and currency a way to make it physically present? If not, then what is the difference?? Please dont duplicate it as i have read other answers and then asking.
Ravi Kd's user avatar
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