How is new money created in the economy?

[Oddball]

So the OP started this thread to point out how little the Trumpers know about the subject

Coming from someone who knows fuckall about any subject, let alone this one.

 

[Oddball]

No, you can’t “exchange” it for gold, not like you used to. Used to be you could take a $100 bill and exchange it for $100 worth of gold. You can’t do that anymore and that $100 worth of gold will cost more when you buy it from one of these gold brokers.

Gold has value in its rarity, and because of people’s desire for it. Supply and demand essentially.

Along with portability and it's non-perishable....Two things that authoritarians particularly hate.

 

[frigidweirdo]

This is the kind of thing that tends to be tossed around a lot around here, but new people seem to address at its roots. So let's talk about it.

Money is created by production of something.

Food is the main one. The more food a society can produce, the more it can sell, up to a point. The less people who work in food production, the more they can do other things.

Getting things from the earth, like rocks and metals is also another one. You dig it up, and then you make it into something, it has value.

The time someone puts into something creates a certain amount of value, but a lot of it comes from the raw material.

When a person buys this product, they're essentially swapping their production for someone else's production.

 

[Lesh]

Coming from someone who knows fuckall about any subject, let alone this one.

You’ve already embarrassed yourself here. Go sit in the corner

 

[Lesh]

Money is created by production of something.

Food is the main one. The more food a society can produce, the more it can sell, up to a point. The less people who work in food production, the more they can do other things.

Getting things from the earth, like rocks and metals is also another one. You dig it up, and then you make it into something, it has value.

The time someone puts into something creates a certain amount of value, but a lot of it comes from the raw material.

When a person buys this product, they're essentially swapping their production for someone else's production.

Nope. That’s wealth.

Money is something different

 

[Lesh]

Along with portability and it's non-perishable....Two things that authoritarians particularly hate.

Lots of things for that criteria. It has no real inherent value.

 

[frigidweirdo]

Nope. That’s wealth.

Money is something different

Well, money, the actual physical coins and banknotes, are produced by people making them.

What money is worth, is created by production. You might have a $1 bill, it could be worth anything. It could be the equivalent of buying a small candy, or buying a car. The worth of money is based on production.

 

[Lesh]

What value does currency have? Its only value WAS because it was backed by gold, a tangible asset that was desirable to people. Now we’re not on the gold standard, so what gives currency its value?

The same thing as gold.

Our BELIEF that it has value

 

[Oddball]

You’ve already embarrassed yourself here. Go sit in the corner

I've done no such thing....Certainly won't be chided by one of the forum's top 5 dopes.

 

[Lesh]

Well, money, the actual physical coins and banknotes, are produced by people making them.

What money is worth, is created by production. You might have a $1 bill, it could be worth anything. It could be the equivalent of buying a small candy, or buying a car. The worth of money is based on production.

So what determines how much money is in circulation . Hint… it’s called the money supply

 

[Lesh]

I've done no such thing....Certainly won't be chided by one of the forum's top 5 dopes.

You’re too stupid to know how stupid you are it seems

 

[frigidweirdo]

So what determines how much money is in circulation . Hint… it’s called the money supply

Well, the amount of money is circulation will depend on what people need, and the people in charge who decide how much money is needed.

 

[Lesh]

Well, the amount of money is circulation will depend on what people need, and the people in charge who decide how much money is needed.

It has nothing to do with “how much people need”.

The Fed creates money (actually increases the money supply) as a reaction to the overal economy.

Of the economy is “hot” they raise the interest rate on the money they create . That means less borrowing.

If the economy is sluggish they lower the rate which increases borrowing

 

[Hossfly]

Understanding How the Federal Reserve Creates Money

Learn how the Federal Reserve creates new money in the economy, and find out how it adjusts interest rates and the money supply to affect unemployment.

www.investopedia.com

 

[frigidweirdo]

It has nothing to do with “how much people need”.

The Fed creates money (actually increases the money supply) as a reaction to the overal economy.

Of the economy is “hot” they raise the interest rate on the money they create . That means less borrowing.

If the economy is sluggish they lower the rate which increases borrowing

They don't "create" money. The more money they print doesn't mean the value of all money changes. It just means the value of a dollar changes.

 

[Lesh]

They don't "create" money. The more money they print doesn't mean the value of all money changes. It just means the value of a dollar changes.

They increase and decrease the money supply as needed to keep the economy on an even keel

They do that by increasing and decreasing the interest rate they charge on the money they lend out (create)

 

[Stormy Daniels]

Money is created by production of something.

Food is the main one. The more food a society can produce, the more it can sell, up to a point. The less people who work in food production, the more they can do other things.

Getting things from the earth, like rocks and metals is also another one. You dig it up, and then you make it into something, it has value.

The time someone puts into something creates a certain amount of value, but a lot of it comes from the raw material.

When a person buys this product, they're essentially swapping their production for someone else's production.

Nothing you're saying outlines a scenario where an economy gains new money. Only one where the same money moves around through the economy.

 

[Stormy Daniels]

No, you can’t “exchange” it for gold, not like you used to. Used to be you could take a $100 bill and exchange it for $100 worth of gold. You can’t do that anymore and that $100 worth of gold will cost more when you buy it from one of these gold brokers.

It's the same thing. In both scenarios you're exchanging cash for gold.

See, the mistake you are making is that you're assuming there is some kind of magical objective value inherent to gold. That's not true and it's never been true. Gold is only as valuable as two people are willing to agree. That has always been true.

Gold has value in its rarity, and because of people’s desire for it. Supply and demand essentially.

Exactly. Supply, and demand. If the gold broker has the supply and you have the demand, only our mutual agreement to conduct a transaction at a certain price can assign any value to the gold.

 

[BluesLegend]

Nor does the Fed actually create wealth. It transfers wealth, that's all.

I go out onto public lands and dig up gold while the left whines and throws a hissy fit.

 

[ThisIsMe]

It's the same thing. In both scenarios you're exchanging cash for gold.

See, the mistake you are making is that you're assuming there is some kind of magical objective value inherent to gold. That's not true and it's never been true. Gold is only as valuable as two people are willing to agree. That has always been true.



Exactly. Supply, and demand. If the gold broker has the supply and you have the demand, only our mutual agreement to conduct a transaction at a certain price can assign any value to the gold.

All I know is that gold was used as money thousands of years ago and was used up until governments started switching to currency. Gold has some kind if value because it’s a tangible asset that has use, be it whatever that use is, and it has desirability as a precious metal. Currency has no value, it’s just paper, it’s not backed by anything, it’s not based on anything.

So, I guess the answer to this situation is that, our way of life is a facade, built on nothing, backed on nothing. I guess that’s why other countries are trying to get away from the dollar