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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 ...
Topher Brennan's user avatar
34 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 ...
JoaoBotelho's user avatar
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31 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 ...
BB King's user avatar
  • 6,158
26 votes

Can someone explain why sterling-dollar parity is bad?

There's nothing wrong with \$1=£1. Unless it was \$1.50=£1 last week - then it's a big problem - for the people who have £, at least! The people who have \$ will be glad they can buy things from the ...
Quitting Due To Antisemitism's user avatar
23 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 ...
Patrick Stevens's user avatar
21 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 ...
Tiercelet's user avatar
  • 371
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 ...
1muflon1's user avatar
  • 56.8k
13 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 ...
luchonacho's user avatar
  • 8,591
12 votes
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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 ...
noob2's user avatar
  • 255
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 ...
Ben Miller's user avatar
10 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 ...
Chieron's user avatar
  • 201
10 votes

Is there any pressure to keep currency exchange rates around 1?

There are some counterexamples to the premise of your question: A USD has been on the order of 100 Japanese Yen JPY for decades. By the way, 1/100 JPY used to be called "sen", and 1/1000 ...
Dimitri Vulis's user avatar
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 ...
410 gone's user avatar
  • 8,168
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 ...
Frank from Frankfurt's user avatar
8 votes
Accepted

Are cryptocurrencies a ponzi scheme or a bubble?

In general, "Ponzi schemes" in the context of asset pricing refer to "rational bubbles", or a failure of the transversality condition you need when passing from a flow identity to a present value ...
Ege Erdil's user avatar
  • 691
8 votes

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

Economic analysis always requires making some assumptions at some point. The assumptions that you make should try to fit reality the best that they can. Regarding your specific situation, there is a ...
jmbejara's user avatar
  • 9,355
8 votes
Accepted

What are the reasons for Russian Ruble to strengthen in the past few days?

It’s likely combination of several factors. Some of it it’s because Russia has instituted capital controls (see Reuters). That means that Russians are limited or in some cases even prevented from ...
1muflon1's user avatar
  • 56.8k
6 votes
Accepted

Why could interest rates go up if Brexit happens?

What would happen in the event of a "Leave" vote in the referendum? Well, the pound would quickly fall in value against its major trading partners - and some falls have already happened as the "Leave" ...
410 gone's user avatar
  • 8,168
6 votes

Gold coins as currency?

Here are three types of money: Commodity money: goods of value are used as money (e.g. gold in your example, or cigarettes in a prison), Representitive money: money is still based on a commodity but, ...
Ubiquitous's user avatar
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6 votes
Accepted

Are there plausible scenarios for the U.S. dollar to fall out of use as the world's reserve currency?

There are many plausible scenarios in which the dollar ceases to be the de-facto currency. They all have a few things in common. For people to stop using dollars for international trade, there would ...
farnsy's user avatar
  • 836
6 votes
Accepted

How can the HKMA peg the Hong Kong dollar at 7.8 HKD/USD for so long?

To maintain the currency peg, the Hong Kong Monetary Authority (HKMA) has to buy HKD and sell USD when the currency comes under depreciation pressure and sell HKD and buy USD when the currency comes ...
M3RS's user avatar
  • 1,087
6 votes

What is the maximum number of characters in a currency symbol?

Instead of currency symbols, some of which are used by more than one currency as @HotLicks suggests, you may want to consider the three-letter currency codes used in most currency exchanges. Here is a ...
Herr K.'s user avatar
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6 votes
Accepted

What is the name of this economics tale about the role of money?

The story you are looking for might be "The Enchanted Valley" by Eugene Manlove Rhodes. this 1909 story, published in Redbook, could have come from the pen of O. Henry. With a mythical ...
Giskard's user avatar
  • 29.2k
5 votes

In this scenario, which coin is more valuable?

The word 'valuable' is not well defined in this question. If I am willing to buy an apple from you for \$1 and but I am only willing to sell an apple to you for \$4 which is more valuable: An apple ...
Giskard's user avatar
  • 29.2k
5 votes
Accepted

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

There isn't a typical answer. The vendor may want paying in whatever currency represents the highest proportion of their costs, as this reduces their currency risk. But there may also be ...
410 gone's user avatar
  • 8,168
5 votes
Accepted

because bitcoins do not generate earnings, then (it is a ponzi scheme)?

What is the reasoning behind the notion that because bitcoin has no intrinsic value therefore it's not suitable as currency? Or, to put another way, if no one "held" US dollars, but simply used ...
JimmyJames's user avatar
5 votes

Gold coins as currency?

This question rises from confusion about basics. I'm going to cite some answers I've placed elsewhere, hopefully this gives a sufficient base such that you can answer this question on your own. ...
FooBar's user avatar
  • 10.7k

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