I understand that money needs to continually be printed as bills and coins are damaged or lost, but wouldn’t any currency be way more stable if it was just printed slower than it’s taken out of circulation?
I understand that money needs to continually be printed as bills and coins are damaged or lost, but wouldn’t any currency be way more stable if it was just printed slower than it’s taken out of circulation?
Interest rate manipulation is one lever the government and the treasury has.
Another way you do that is with treasury bills. It’s easier for me to think of it how it works from the point of view of an investor. Do they get cash? Then the investor sold a treasury bill back to the treasury and increased the general money supply/the government buys treasury bills. To decrease the money supply, the investor buys treasury bills/the government sells treasury bills. This happens electronically nowadays, so no actual cash needs to be printed.
The actual amount of specie (cold hard cash) that is needed doesn’t necessarily reflect the amount of cash (cash and cash equivalents. Yeah, I know) in an economy anymore
Thanks for reply. Im not familiar with this, but, it sounds like it is sort of a closed loop, and changes to money supply are only temporary. Money supply is used to buy treasury bills, they or not considered money supply, so it reduces, until they are turned back into money. Oh, I suppose the interest on the treasury is the new money the national bank must create, in order to pay the investor. That’s new money.
Is that right… on the money? (Sorry)
so, first, sorry for the link but it’s a quick macroeconomics thing. i haven’t evaluated the whole thing but it looks right enough, should help us to be using the same vocab. econ uses the same words as english, but they use them wrong and i accidentally learned that language
you’re right, it would be a closed loop if it weren’t for the foreign currency market. Treasury Bills are often viewed as a form of long-term, less-fungible currency and the Federal Reserve prints those too. There are different types of “money” depending on how available it is, right? Like, if you have a certificate of deposit at your bank that says you’ve deposited your money for a year so you get an advantageous interest rate with them. That’s unarguably M2 cash. Some economists like to argue whether TBills are investment vehicles (because they definitely are) or M2 cash (because they behave a hell of a lot like that too) or both and that’s fun. Doesn’t make a hell of a lot of difference to me because i’m only an economist by heritage now.
It’s one of those weird things where investment and money supply starts to overlap. but yeah, it is kind of thing where the fed can print off a bunch of treasury bills and cause a shitton of inflation if they wanted unfortunately. maybe deflation i have not had the coffee yet i am still waking up but you know it would move one of the directions. people would have to buy the TBills. or sell them. I cannot with the thinkings any longer, but it would theoretically have an effect on just that one market’s money supply.
Unfortunately a lot of different markets do their marketing in this one specific market so it hurts globally when statesia gets market shocks.