How does paper money actually work and the World Bnak

[Samaalic Era]

Sxb do you want to get us nuked?

Use gold and silver? I want to go back home to a peaceful Somalia one day.

Seriously though. If you don't play along with their economic system then you don't get to benefit from it.

West Europe and East Asia voluntarily accepted the dollar as the global reserve after ww2 because the US was by far the biggest market and they wanted access to it.

Economics and monetary theory is a work in progress so don't stay up for a perfect system.

I know they US will not stand for Gold and Silver as a medium of exchange and would go to war to ensure it never happens. However there is no denying that breaking off from the global financial system and using Gold and Silver as our currency would make us extremely wealthy and well off society

 

[Ras]

I know they US will not stand for Gold and Silver as a medium of exchange and would go to war to ensure it never happens. However there is no denying that breaking off from the global financial system and using Gold and Silver as our currency would make us extremely wealthy and well off society

What is this gold you speak of? Can you eat it?

Currency is just a tool brada. Like a spanner or car.

What will make us wealthy is the productivity of our labor force and efficency of our use of capital.

Specifically... How much value each of us generates on average for every hour of work and how we reinvest that value to increase productivity.

That number decides the value of our currency; our living standards, our standing in the world and how much we contribute to it.

It has little to do with resources or monetary policy.

 

[Basra]

How did it replace Gold and Silver as a nedium of exchange and how can a country like the US just print money out of thin air but not impact its economy

Go read this book on the origin of bank note money by Janet Gleeson

 

[angelplan]

So let's pretend that your dad is a baker, and sends you to school every day with a slice of cake in your lunchbox. It's really good. You can trade that cake with the other kids, and because slices of cake are rare, everyone is willing to make good trades for that cake. They will do your homework for that slice of cake. They will give you a cool comic for that slice of cake. One slice of cake a day makes you the most important person on the playground.


So you decide that you're going to bring a WHOLE cake to school next time, so that you'll get even MORE things! But... now that cake isn't as rare, and everyone can tell that's the case, they are less willing to do the same work for just one slice. Now they know that they could ask for TWO slices of cake for doing your homework, or THREE slices for giving you that comic, and that they could realistically get it.


Having more cake available made each slice of cake less valuable. Now, instead of one slice of cake getting you homework, everyone is asking for two slices.

The same basic concept applies to money. Money is valuable because it is rare.


If there are only $1000 dollars out there, having $100 is a BIG deal! You've got 1/10th of all the money out there! That means you have a lot of power! But if the government decides to print more money, so now there's $1,000,000 dollars out there, only having $100 is no longer that special. The money you have isn't as valuable anymore.


That's inflation. When more money is printed, it loses its value. Many countries have tried this, thinking that the short term benefit would be worth it, but in the long run it has ruined many economies.

Post of the year 2020 - Best comment 2020

 

[Basra]

Post of the year 2020 - Best comment 2020

in the same logic, money alone is not the only valuable thing in a society or economy. For example United states prints lots of money, but u don't easily see it. There is security, there is a lot of jobs, yes the government is in big debt, but that does not mean anything to the poor man. A job, and basic necessity only matters.


Now compare that to say, Somalia. No productivity. No jobs. No exchange of made goods and created goods. The money is every where like useless paper. Had Somalia been over populated, lots of jobs and security--those many money notes would have spread to many people, making it rare to be seen and thus a person does not have to go with a box of somali money notes to buy a loaf of bread??


Is that good enuf @angelplan

 

[angelplan]

eedo @Basra

 

[Basra]

eedo @Basra

What is it Eedo? looooooooooooooool

 

[Abdullnur]

How did it replace Gold and Silver as a nedium of exchange and how can a country like the US just print money out of thin air but not impact its economy

It used be backed by gold ,but not enough gold for all the cash in world so now it's backed by the US military.

 

[angelplan]

What is it Eedo? looooooooooooooool

 

[YourBroMoe]

@YourBroMoe this video seems to shit on fiat money, basically saying that it has no value and always ends up in failure. From what they say in video I don't see why G&S aren't superior to paper.
Also, I don't get this: "3. The only way to increase the money supply is to make every dollar worth less than the amount of gold/silver, or find more gold/silver. This of course will simply increase inflation again." Pls explain.

I ain't even said fiat currency was good. I just explained the current financial system.

Also, what I meant from the quote was, if the gold supply was the same, the only way to print more money, is to make every dollar worth a fraction of the gold it was worth the previous year.

If I had $1000 for a 1000 ounces of gold, and then I printed $200, then instead of the 1:1 ratio, I'd now have a 1.2:1 ratio. Meaning, more money would need to buy the same gold.

Or, you can mint more gold.

But gold isn't the thing ppl want to buy. It's the things themselves.

 

[Desert Flower]

Fun fact: There isn't enough printed money for everyone in the world. So, in the event of a catastrophe and everyone needs cash asap from the ATM machine, it won't be possible to get your money because it doesn't exist in the physical sense.