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If you create a currency, you can decide how it works. Suppose you create an electricity trading system - i.e. a big substation with lots of high voltage wires going in and out and an electricity meter on each wire. (I'm sure it's more complicated than that, but that's the principle) Now since it's your system you get to decide how it works. You can make a ...


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But energy can not be easily stored and traded for normal persons so you need some form of stand-in as a currency so i am thinking like 1 "currency coin" is worth 1 kwh. And that to make new coins for the system you have to produce/extract the same amount of energy to the grid. And when that energy is used the "currency coin" is destroyed ...


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Crypto-currency depends on blockchain which is a technology for producing evidence that claims to be tamper-proof. The legal context is described in this short article Blockchain as Evidence: https://www.isba.org/sites/default/files/sections/civilpracticeandprocedure/newsletter/Civil%20Practice%20and%20Procedure%20November%202019.pdf Despite the hoopla, ...


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An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money, Paul A. Samuelson https://www.journals.uchicago.edu/doi/10.1086/258100 This paper describes money as a perpetuity which must persist for infinite generations to support distribution of consumption goods to retirement households. In terms of legal attributes the debt ...


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Well first of all we have to make it clear that we are talking about government debt held by central banks. Non-trivial amount of government debt will be borrowing from households firms and other governments where it is not valid to argue that the debt is an illusion. When it comes to debt held by central banks not much would change although it would make ...


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Full capacity means utilization of all resources in economy. That is all labor, capital and other resources are already used at their best uses. Economy will not always work at its full potential for various reasons. For example, due to fall in aggregate demand during recession, which can cause unemployment to be above natural rate. Monetary policy or ...


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The national debt and currency are financial assets of the private sector and local governments. Since currency can be withdrawn on demand from the aggregate bank sector the ratio of national debt to fiat currency is determined as a portfolio choice of the private sector and local governments. The central bank and/or commercial bank sector must use its ...


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Does this mean that Governments can continue to print a limited amount of fiat currency (say 5% of GDP) annually forever? Yes government can 'print' (I use quotation marks because most money is created electronically nowadays) any amount of fiat currency it wants to. In other words, is there a problem even if this debt that the Government owes itself, ...


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In a free banking model a government could define the gold Rupee by its name, Rupee, and then by the specification of quality and weight of gold content. Then in theory any unit in the economy could issue liabilities that are payable in gold Rupee. Bank notes or gold notes would pay no interest and be payable in gold upon demand at their gold window. Then ...


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The key to answering your question is to consider whether or not the bank that has just extended a new loan must make an interbank payment of reserves. So let bank A extend a loan 100 to customer 1. The bank debits loan assets for an increase 100 and credits deposit liabilities due to customer 1 for an increase 100. The bank balance sheet expands. Assume ...


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The question in the title is actually a bit broader than the question in the body, I will try to answer both questions starting with the one in the title. Answer to Question in the Title Can banks 'create' money on their own or do they need help from other banks? Yes, banks actually can crate deposits on their own without help of other banks, thanks to ...


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