So like...em...where does MONEY come from?

[Josephus]

[FIXED] OK...Probably the silliest question ever on this forum, and there have been a few. But bear with me.

I was at church last night, and started day dreaming. And started thinking about money and more specifically...since it doesn't go on trees...Where does it come from?

I mean...OK...I know that the national bank prints money. I know that because every year I see crispy new bills. But how does that enter the ledgers? I mean....what? If it prints 10 billion dollars a year; doesn't it have to write it off against something else? Basic accounting...debit and credits.

A government can't just print money to pay its debts..right? So how does it decide how much to print each year. What happens if it doesn't print any at all?

[jimmy olsen]

What does this have to do with Monday?

[Syt]

Misleading thread title.

[Josephus]

Oooops.


I meant MONEY...can't change title.

[Syt]

Oooops.


I meant MONEY...can't change title.

Easy. Money comes from Baltimore. Next question.

[jimmy olsen]

Oooops.


I meant MONEY...can't change title.

I edited a thread title yesterday. You should be able to do it too.

[stjaba]

*Warning*

I am not an expert or knowledgable on the subject whatsoever. The following explanation could be completely wrong.

But my interpretation is what the treasury does is basically loan (in the form of bonds) money to banks. Banks loan money to each other and to the public. "Money" is created because banks are only required to keep a certain percentage of deposits on reserve(the fractional reserve system) and are free to loan at the rest. What ends up happening is that the same "dollar" is loaned out several times. This is how the money supply grows. This is why decreasing interest rates increases inflation and the money supply. As it gets cheaper to "buy" money, supply increases and the value of money goes down.

[stjaba]

Or for a slightly more educated explanation, go to http://en.wikipedia.org/wiki/Money_Supply

[grumbler]

The physical manifestation of money is currency (which is the thing that is printed) and currency is also non-physical (ie electronically stored).

Money "comes from" physical or mental labor which others wish to acquire.  Money is the "concrete but abstract" manifestation of the value of that labor.  The value is expressed in currency, but how much currency it takes to make up the "money value" of the labor is dependent on the perceived value of the currency at the moment of making the agreement to trade the currency for the results of the labor.

Generally, the terms "money" and "currency" are used interchangeably, but they are not really the same thing.

[Josquius]

Physical money that we own these days is largely worthless (anything of worth being paper). Its value comes in that it is a guarantee by the big, powerful issuer that you can cash it in for the actual worth printed on it.
True currency started off being transferable checks and it sort of just ballooned and everyone accepted that the issuers were sound.

What I don't get though is how early money developed. Sure, gold is rare, but so what? Why does that make people want it rather than something that is actually useful? Magpie complex shouldn't explain it all.

[Syt]

Its value comes in that it is a guarantee by the big, powerful issuer that you can cash it in for the actual worth printed on it.

Isn't that abolished after letting go of silver/gold standards? Or do you mean that the issuer guarantees you can go to the store and buy groceries with it?

[Tamas]

What I don't get though is how early money developed. Sure, gold is rare, but so what? Why does that make people want it rather than something that is actually useful? Magpie complex shouldn't explain it all.

You sell a crapload of opium to a chinese trader. You can either get a big pile of silver coins for it, which you have to guard and transport back to England, or you can get a note from a big english bank which the chinese acquired, on which the bank in england will give you the exact same amount. Which one will you choose?

[Tamas]

Its value comes in that it is a guarantee by the big, powerful issuer that you can cash it in for the actual worth printed on it.

Isn't that abolished after letting go of silver/gold standards? Or do you mean that the issuer guarantees you can go to the store and buy groceries with it?

My impression was, when I learned about this several years ago, that basically money worth something because everyone agrees it worths something. Nothing more behind it.

[Syt]

My impression was, when I learned about this several years ago, that basically money worth something because everyone agrees it worths something. Nothing more behind it.

That, and trust in government, state, economy etc.

[The Brain]

Everyone eh?

I disagree with money being worth anything. Now hand that worthless crap over to me plz.