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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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The video gives the impression that the Fed "sets" the money supply. However this is not true at all. Surprisingly the money supply is mostly determined by private banks and the amount of lending … that they do. The Fed then has some things it can do to influence the money supply. It's a system called fractional reserve banking and its very hard to get your head round. For a less technical …
answered Jan 5 '17 by Mick
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Answer: no. In our fractional reserve monetary system, money (in particular in the form of demand deposits) is being created and destroyed all the time. It is created when loans are made by … fresh \$10 will have come into existence at that moment. Re: "when does it disappear"... if you had previously borrowed \$100 form a bank and you now repay them that \$100, that money disappears out …
answered Nov 21 '17 by Mick
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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 … "? or perhaps "dollars per unit time"? Or a ratio between two things? If I understand it correctly, the level of demand for any produce (other than money) is the rate of flow of money that is …
asked Apr 11 '16 by Mick
5
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3answers
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 … degree to which you can easily buy things with X. What can you buy with bonds? If your answer is that "you can sell your bonds for money and then buy things" - that simply underlines that the bonds …
asked Mar 16 by Mick
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In many countries governments have made laws that bar themselves from creating money directly. Instead they have to go via a circuitous route involving the creation of bonds. This means that the … government has to go into debt in order to create more money. The reason for this self imposed restriction seems obvious to me - it is a kind of advertising to prospective purchasers of government bonds …
asked Mar 2 by Mick
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Amongst central bankers there is no controversy, the money multiplier is plain wrong, see this definitive paper from the Bank of England here. So assuming that loans create deposits... Imagine a … B. Note that as A repays the principal on the loan the money disappears back out of existence. The bank only gets to keep the interest. …
answered Nov 20 '17 by Mick
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The answer to your question is complicated by the fact that there are (at least) two distinct types of "money" in our economy: "base money" and "broad money". You can think of base money as tokens … that get passed from person to person as trade is carried out, much like a non-economist would guess that money worked. This however constitutes only a small fraction of the money in our economy. The …
answered Jul 1 '15 by Mick
1
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First of all you need to understand that in our fractional reserve monetary system, bank loans create money and loan repayments destroy money. If you have a period in which the rate of repayments of … existing loans exceeds the rate of creation of new loans (like after an asset bubble has burst) then a central bank can do a lot of QE without increasing the money supply. Consider it like trying to …
answered Dec 11 '16 by Mick
0
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power of your wages. However, it may not be such a good idea to have a completely fixed money supply and deflation - it may become unstable if people noticed that storing money under your mattress … was a perfectly effective way to save. If many savers started doing this then it could induce cycles of bubbles and crashes in the value of money. It would probably be better to deliberately increase …
answered Mar 22 by Mick