36

Bank notes have serial numbers. The mint keeps track of what's been issued, and also the quantity of notes that have been taken out of circulation and destroyed. Back accounts are another matter. In that case there's not very much "currency" involved, but instead "assets" and "liabilities". Liabilites are money owed to others: to a bank, each account is a ...


15

Inflation When the Federal Reserve uses quantitative easing, it adds more money to banking ledgers and removes investment opportunities. The amount that they can do is limited by the reality of the economy. Too much and they cause inflation. Not enough and there is deflation. While nominally under the control of the Fed, in reality the amount is ...


12

For example, I have $100 in the bank. I pay $50 to someone else, so the bank is supposed to take $50 away from me and add it to the other person's balance (or send it to their bank). How does the country that issued the currency ensure it actually happens like this? What prevents the bank from sending $50 away without subtracting it from my account (...


9

There is some debate about whether it's a good rule in the first place but there is a number of reasons why governments don't do this: Because they don't have to. Governments have in their taxpayers a captive audience that always has to pay; limited only by their willingness to pay. So as long as the population is not too upset by the tax burden and the ...


8

I'm not sure about this year, but for 2017 the figure from the UN WESP report (-3.5%, table A.3) coincides with the one from BOK (the Bank of South Korea), which regularly publishes such statistics, although not always with summaries in English. The BOK is not terribly transparent about their source data basic data on production quantities supplied by ...


8

There isn't a central registry with any detailed information on how much of any particular currency is in circulation. Governments have estimates for physical currency in circulation, but most money in existence today is simply a number in an account with no physical object representing that value. In general banks don't allow accounts to be in multiple ...


7

Only the ECB has the right to issue Euro banknotes (p. 103). States can issue coins up to a total value set by the ECB. At some point during the initial creation of the Euro, and during the accession of new members, the exchange rate is set. From that point, swapping the paper is merely an administrative task.


6

I have no hard data, but to give you an idea of the legitimate market's comparative strength, prior to 2013, the Choco Pie snack cake (a brand of Moon Pies) had entered into the North Korean Black Market en mass due to it's use by South Korean employers at the Kaesong Industrial Region (KIR) to pay North Korean workers bonuses without using cash, which is ...


5

Printing money causes inflation, which is an implicit tax. Worse, inflation is self-reinforcing. So if you print $3.8 trillion one year (USA federal spending), you have to print $7.5 trillion next year. That's the original $3.8 trillion plus an estimated $3.7 trillion for inflation caused by the extra money. That's assuming that you have a $3.9 trillion ...


5

In the United States, the Federal Reserve (central bank) publishes the reserve requirements. Reserve requirements must be satisfied by holding vault cash and, if vault cash is insufficient, also by a deposit maintained with a Federal Reserve Bank. An institution may hold that deposit directly with a Reserve Bank or with another institution in a pass-...


5

Runaway or hyperinflation occurs when there is a lot more money than there are goods at current prices. In theory, you could fix this two ways. First, you could flood the economy with goods, reducing the monetary pressures. I don't know that anyone has really tried that against hyperinflation, as the amount of goods required would be tremendous. ...


4

To answer the one sentence summary question, I would first correct and clarify not the simplifications made in the detailed summary, but the inaccuracies in the detailed summary. First, be careful to distinguish between "Fractional Reserve Banking" and "Central Banking, the Money Creation, and the Balance Sheet." Fractional Reserve Banking was defined in ...


4

You're correct. The government technically can never run out of money because it runs on the fiat standard Fiat currency is legal tender whose value is backed by the government that issued it. The U.S. dollar is fiat money, as are the euro and many other major world currencies. This approach differs from money whose value is underpinned by some physical ...


2

This is an excellent question and it speaks to the fact our media and our schools teach and speak to this topic as if we did not have the worlds' reserve currency. Also, we have been living in a time period where we are dependent on central bank interventions. The world hangs on every pronouncement of the Federal Reserve. So what? So we have the worlds' ...


2

QE was FED buying medium and long-term bonds. The effect of that was to reduce the interest rates of long-term bonds. The question's premise was that this was done to help banks, but it wasn't. It had the opposite effect. This can use some context. After the financial crises, FED lowered the short-term interest rate (FED primary job is overnight ...


2

Many of the arguments for and against the Federal Reserve have to do with it being separate from the Federal government itself. The Fed (Federal Reserve, NOT the Federal government) was created as an independent entity so that it would not become politicized and have to bend to the will of politicians. There is something to be said about the inefficiency of ...


2

Making Money While a government can issue currency, in most cases it is issued by a Central Bank. These banks are often government owned, but could also be private entities. While interesting, this is largely irrelevant to the question except to note that money doesn't have to come from a government, but regardless of source, it still has fundamental ...


2

I don't know about the United Nations specifically, but (as hinted at in Fizz' answer) remote sensing offers multiple methods that can be used to estimate the size of an economy: Agricultural land use as well as the construction of roads, factories etc can be seen on satellite images Emissions from industrial activity can be measured and compared over time. ...


1

There's no firm data on this because NK is not publishing much if any info on its economy. But there are some expert estimates: Not only does North Korea not publish economic data, but it has an important black market and rampant corruption. [...] The typical North Korean household derives more than 70% of its income from market activities - both legal and ...


1

"If a government issues currency and it ends up in bank accounts abroad, what stops banks from making a 'mistake' during a transfer, accidentally duplicating the currency?" Short answer: Nothing stops the bank, but it'll cause it to (eventually) go bust. Explanation: When a bank has a certain balance in your account, it means the bank is liable to pay ...


1

What you describe is exactly what happens. Banks create (virtual) money. Namely, if a bank actually "has" (whatever that means in this context where we do not talk about cash) a certain amount, then it can and will issue credits to a much higher amount. And suddenly their customers "have" money to buy cars and houses and whatnot ... In most legislatures, ...


1

Federal Reserve There are two ways to track United States issued currency. One is by the currency itself. If you have actual paper or coin currency, then clearly you have a valid claim. The other way is by the Federal Reserve. Each US bank has to justify its lending with the Federal Reserve. It must keep a certain amount back as reserves. Those ...


1

Unless you have a particularly civically-educated society, there would be no benefit. If times are good, and you either raise taxes or don't cut taxes and accumulate a rainy day fund or pay down debt, the average short-attention-span historically-illiterate voter will just see it as soaking the taxpayer for extra funds when because the money is there to be ...


1

Tl;dr: There is some effect, but it doesn't really matter. When people take currency out of circulation, whether it be by saving it or for numismatic reasons, the effect is the same. The overall levels of currency circulation decreases, and that has an effect on the fiscal situation within a currency area. It is for this reason that one of the tools that ...


1

There are already some good answers to the original question so I will just clarify one thing: When government intends to spend an amount of money they typically must acquire it by issuing bonds to a foreign country or by issuing bonds to the Federal Reserve for the cash that it prints. This inevitably ties money creation by the central bank to ...


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