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money
Money
Bank money creation
The essence of the contemporary monetary system is creation of money, out of nothing, by private banks’ often foolish lending. — Martin Wolf, Financial Times, November 9, 201016 There is a natural immature human inclination to find a way around the rules if a tangible, immediate reward is at hand....
Commodity money
Observe well these rules: It is a very common mistake to say that money is a commodity…Bullion is valued by its weight…money is valued by its stamp. – John Locke, An Essay on Money & Bullion, 17181 Commodity money is defined by the physical nature of the token. The physical...
Complementary money
A healthy ferment around money systems exists on the edges of society and in small communities. People unhappy with the outcomes of the prevailing money system seek better options. Currencies that are complements, supplements or alternatives to the national money have often helped communities get through difficult periods when the...
Experiments
A widespread awareness that something is deeply wrong with our financial and economic systems is pushing creativity. A variety of online virtual monies are popping up. They are called crypto- currencies because the money unit itself is encrypted information in a secure code. The best known is Bitcoin, a curious...
Fiat money
Fiat is a Latin word meaning let it be done. It is generally used to mean a decree by an authority. The term fiat money means some authority decreed a certain type of money to be valid currency. By definition, money is used broadly as a medium of exchange by...
Fractional reserve money creation
Keep in mind there have been no 100% commodity money systems in primary, widespread use for at least 700 years – if ever. And, keep in mind how easy and how prevalent it has been to think money is a commodity, when it has mostly been an account of ownership...
How do people create money?
There are three aspects to the how of money creation: the tangible, the intangible, and how money is entered into an economy. This is true whether or not the actual money token itself is tangible. Hands on Every type of token, tangible or not, requires some hands-on effort to create...
How is money destroyed?
Just as money is created, it can be destroyed. How money is destroyed is generally a mirror image of how it is created, though it doesn’t have to be. If prices are rising in a fixed value money system or rising more than desired in an elastic value system, and...
How is new money created?
The Federal Reserve Act of 1913 made law a fractional reserve money creation system: private banks create new US money when they exchange their own IOU-future-value notes, called Federal Reserve Notes, for an IOU from either the public or the government. When the Fed system was first established it was...
How much money?
There is a certain proportionate quantity of money requisite to carry on the trade of a country freely and currently; more than which would be of no advantage in trade, and less, if much less, exceedingly detrimental to it. — Benjamin Franklin, The Nature and Necessity of a Paper Currency,...