How can money be created?

[rodsky]

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That didn't explain the gist of the question at all



The question was not why there is a need for money ... that is obvious ... but why can't a government just increase the supply of money to pay of it's debts. The perception of money is not in question.

The reality is that back in the old days, if you had a dollar, you had a coin that was made of gold that was worth one dollar.You would be able to trade your coin anywhere you went and it would still be worth one dollar because the value of the coin was with the coin itself. These days, coins aren't made of gold. People don't carry treasure chests around ... yet every piece of paper money or copper coin the government makes has to be insured by the government that it has the goods to back it up. That is why the Philippine government can't issue a trillion dollars worth of pesos if it wanted to. You can't pay bills with paper money as strange as that sounds. Just when you thought cash was king. Some troubled countries have inflation rations in the hundreds of thousands (ie Zimbabwe) ... making their currency virtually useless. The currency might be useless ... but a dollar worth of gold is still a dollar worth of gold in the world's market.

Sorry. Well at least it motivated you to do more explaining. I actually learned something. Thanks.

-RODION

[eax]

That didn't explain the gist of the question at all



The question was not why there is a need for money ... that is obvious ... but why can't a government just increase the supply of money to pay of it's debts. The perception of money is not in question.

The reality is that back in the old days, if you had a dollar, you had a coin that was made of gold that was worth one dollar.You would be able to trade your coin anywhere you went and it would still be worth one dollar because the value of the coin was with the coin itself. These days, coins aren't made of gold. People don't carry treasure chests around ... yet every piece of paper money or copper coin the government makes has to be insured by the government that it has the goods to back it up. That is why the Philippine government can't issue a trillion dollars worth of pesos if it wanted to. You can't pay bills with paper money as strange as that sounds. Just when you thought cash was king. Some troubled countries have inflation rations in the hundreds of thousands (ie Zimbabwe) ... making their currency virtually useless. The currency might be useless ... but a dollar worth of gold is still a dollar worth of gold in the world's market.

Wow. Nice explanation.

Bitaw, ang ako ra nasabtan is money is equal to gold reserves.

[fritzd]

The thing is, its an Economics thing. What you are suggesting is actually a misconception. If it were not, we would have been rich already. Producing more money without gold reserves can hurt our economy. As what they others suggested, do some internet research. hehehe!

[johnbond007]

yet every piece of paper money or copper coin the government makes has to be insured by the government that it has the goods to back it up

Correct me if i'm wrong. The way i understand this is that every amount of money must have an equivalent representation of goods such as food, shelter, clothing and other needs. And if we have inadequate supply of goods, then the supply of more money is also limited, is that how it goes?

that is why the Philippine government can't issue a trillion dollars worth of pesos if it wanted to. You can't pay bills with paper money as strange as that sounds. Just when you thought cash was king.

Could you elaborate more on this...

[johnbond007]

Any more bright ideas here who are willing to share regarding the subject matter?

[d`monyita]

Wikipedia has all your answers ... whether you choose to read into them or not ...

Monetary policy - Wikipedia, the free encyclopedia
Quantity theory of money - Wikipedia, the free encyclopedia
Economics - Wikipedia, the free encyclopedia

ikaw ba.... baka gusto kasi in the VERNacular hehehehe

[moz_k2]

Without gold, what does guarantee the value of our money?

If you don't trust the value of gold, do you trust the logic of cutting down trees
turning it into pulp, putting some ink on it then calling it money?

[johnbond007]

any more explicit explanations?

[knightcarl]

It came to my thought that money is just man-made but why can't the country or the government make/produce more money in order to pay the debts internationally and improve the life of the Filipinos? If money can be created, why can't the government make more of them so that they could put up more establishments/companies and offer very high paying jobs for each Filipino so that no one will suffer and even live in poverty and maybe, no one will have to work abroad just to earn bigger income. I'm poor in Economics that's why i don't understand how it works. Maybe some knowledgeable fellow Istoryans here could share their brilliant thoughts about it especially those who were/are taking up BS Economics.

This is just a very very simple explanation....


During the pre-Spanish times, our ancestors used goods and commodities as currency. When the Spaniards came and colonized us, a uniform set of currency was introduced in the form of either gold or silver (i.e. gold coins, silver coins). There are no rules then. As long as there is supply of gold and silver, the government of course can manufacture gold and silver coins.

Because gold and silver are now scarce to find, governments nowadays print paper money which represents the value of all the gold in its reserves. So in other words, the value of our money depends on our gold reserves plus a lot of factors such as supply and demand. I've heard that oil reserves is now being used for currency.

We cannot just print paper money to our hearts delight because various international agencies such as the IMF, the World Bank, etc. are monitoring world currencies. Think also of the fact that we are connected to the world via the internet and the news so any unusual thing that will happen in our country will always be known to the outside world.

There are certain rules to follow and if we do not follow them then we will be blacklisted, there will be trade embargoes, etc..etc.. The possible repercussions are endless.

We have to follow these rules because we as a country cannot live on our own. We also need other countries for us to survive.





//

[johnbond007]

Well then maybe, why can't countries work all together? I mean, each country will be allowed to create more money on their own so that there will be no nation that will suffer from financial crisis. In that way, maybe there'll be no one living in poverty 'coz each one who works is well compensated.