37 votes

Could eliminating all taxes and only creating new money theoretically work?

It would not work. Historically speaking, governments that try to fund their operations primarily via the printing press experience not just inflation but hyper-inflation. Why? Well, one explanation ...
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35 votes

Why do different countries have different currency?

Two reasons: history and ability to control the money supply. History: paper-money started by being issued by trustworthy agents from kings/governments, as a way to be able to transfer the ownership ...
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  • 2,155
32 votes
Accepted

Why do different countries have different currency?

I will focus on some economics reasons not mentioned explicitly so far. There are economic benefits to having your own currency. Your question essentially raises the question of so-called "Optimum ...
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  • 5,414
22 votes

Are financial markets "unique" for each "currency pair", or are they simply "translated"?

It's not clear what level of answer you're looking for, so here is a much more basic answer. There are indeed many exchanges with many different prices. However, if you have noticed that you could ...
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20 votes

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

dtcm840's answer is about as good as you're going to do for a single actual number: it is clear, well-sourced, and almost certainly misleading. That's not their fault: all comparisons over time ...
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  • 361
18 votes
Accepted

What benefits does Bitcoin (i.e. cryptocurrency) offer?

I'd say that some benefits of Bitcoin and other cryptocurrencies (i.e. "altcoins"), include: Decentralization -- which is advantageous for those who are skeptical of monetary policy, runs on banks, ...
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  • 380
18 votes

Could eliminating all taxes and only creating new money theoretically work?

tl;dr this would not work in either closed or open economy unless your proposal would include very large cuts to current social and welfare spending as only arguably small part of those could be ...
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  • 42.1k
17 votes

Why is the rouble collapsing?

The primary source of the recent ruble collapse has almost certainly been the falling international oil price, aggravated by some other features of Russian politics and its economy. Petroleum ...
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15 votes

What are the known / alleged problems against using energy as currency?

tl;dr: Energy is one of the worst ideas for a currency that anyone's had. It's not fungible, it's not a store of value, and has absolutely no scarcity. Let's look at the details. Commodity currencies ...
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  • 8,002
14 votes

Real Exchange Rate vs PPP rate

There are several exchange rate concepts that need to be distinguished. There are bilateral and multilateral (aka "effective") exchange rates, nominal and real exchange rates, and market-price versus ...
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  • 420
14 votes

Why do different countries have different currency?

There are also many countries without their own currency. For example, Ecuador and Panama both use the US dollar as their official currency. See this list for more examples. There are several reasons ...
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  • 8,437
13 votes
Accepted

What would happen if the world switched to a single currency?

The Euro was always conceived by most Economists as a political goal, not an economic one. Prologue: There is the theory of Optimum Currency Areas (OCA) which characterizes properties that a larger ...
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  • 10.4k
13 votes

I lost $100 in the laundry, who won?

The central bank that issues the currency won; they can now issue an additional $100 without increasing the price level. This is similar to seignorage rents due to overseas circulation— in fact, to a ...
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  • 346
13 votes
Accepted

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

"Cash" is an emergent phenomenon of human economic organization. It exists for lots of reasons, as a provider of economic anonymity, a low transaction cost solution to the double-coincidence of wants, ...
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  • 15.8k
12 votes

When a country adopts the Euro, what happens to its debt?

Yes, upon the introduction of the euro on January 1, 1999, all debt (indeed, all nominal contracts) in participating countries was converted from national currency to euros at a legally defined ...
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12 votes
Accepted

How does a country devalue its currency?

Typically, a devaluation is achieved by selling the domestic currency in the foreign exchange market and buying other currencies. Suppose China sells one trillion Renminbi and buys 157 billion US ...
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  • 16.6k
12 votes
Accepted

On what basis do countries repay international loans?

Only sufficiently credit worthy countries are able to borrow money internationally in their own currency. In principle you are right that such a country could effectively default by expanding the ...
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  • 238
11 votes

Does Dogecoin or Bitcoin have a more appropriate rate of monetary inflation?

Your coins do not have 0 inflation in the long run First, we need to set straight that you have a critical error in your supposition: The rate of creation of money is not the only determinant of the ...
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  • 10.4k
11 votes

Why do different countries have different currency?

You might also want to think about If it's not divided then we can easily use the money anywhere. Is that positive and desirable for everyone in all situations? If you want to control the flow of ...
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  • 211
10 votes

How interest rate affects currency

Its important to keep in mind that the exchange rate is a "price for currency" and just like any other price it is determined by supply and demand. The main question now is what determines ...
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  • 5,414
10 votes

Why do currencies cover orders of magnitude?

No matter where you live in the world, there is sort of a minimum value that your currency needs to practically be able to represent somehow. If your standard unit of currency is more than that ...
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9 votes

Why is the rouble collapsing?

The answer by nominally rigid very correctly hints at oil prices as one of the major causes. I'd add more details and numbers to this point. A slightly longer version is available here. 1. Russian ...
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9 votes
Accepted

What are the known / alleged problems against using energy as currency?

The problems with using an energy-back currency are probably the same problems as using gold or anything else. Some of those mentioned in the link (Wikipedia article) include Mainstream ...
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  • 9,127
9 votes

How does US (its economy, banks, industry) profit from dollar being the "standard currency"?

Some major benefits include: Seigniorage on currency acts as a source of government revenue, allowing for lower taxes and higher spending. One paper (Neumann (1992)) puts this at about \$15 billion a ...
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  • 15.8k
9 votes

Why is the Euro a bad idea compared to other currencies?

One of the key requirements for a currency area to be successful is that there must be a sustainable political mandate to support fiscal transfers between regions, to provide the balancing mechanism ...
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  • 8,002
9 votes

Why does the Dutch disease cause the value of the currency to increase?

How well do you know what you mean with "currency increases"? The term Dutch disease describes an event where a single sector's boom (your example, finding oil) causes the said sector to grow and ...
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  • 1,218
9 votes

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

No, there is no inflation. Inflation is caused by a relative increase in the amount of currency, relative to the amount of scarce goods and services available. As you note, there is a continuous ...
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  • 8,002
9 votes

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

Yes, there is inflation. StackExchange was created in 2008. Anybody who had 5,000 (arbitrary value) reputation points in 2009 would have been perceived as an outstanding member. Now, having ...
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