Posted by The Imp on 29 April 1999 at 05:20:40:

In Reply to: Re: Money Economics posted by Swift Claw on 29 April 1999 at 04:23:44:

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: : : : Money works the same way as stocks. The more paper money there is in existence, the less it's worth. Because most money nowadays is stored electronically, when people sell stocks and completely drain their bank accounts, an awful lot of paper money will have to be minted. It's value will greatly decrease. The effects of this I've mentioned before: though they won't be as great as if the banks were to close their doors for several days, you could expect prices to rise quite quickly. You could expect, as a result, several businesses and companies to close down, or to lay people off. Everything's connected in the economy, like a spider web; as one strand or firm is pulled away, others destabilize.

: : : uh, but I thought that all the money was backed up in the Federal Reserve Bank, or something. (At least I know it is with gold.) How the hell can money be in circulation if it doesn't exist? (Aside from credit cards) Can the government issue electronic money like that? And if it did, then how would the price of the paper dollar inflate when paper money is printed for the electronic money, if all of it was already in circulation anyway?

: : Point-of-Information: There is more paper money in the USA than there is gold in its Federal Reserve. It has been that way for years. Economics is for the most part based off of faith that money is worth something. In reality, money is just paper with ink. There isn't enough gold to back it up.

: Well, technically, how can gold back up paper with ink anyway? (and then, isn't gold just a metal? hmmm..) I thought that was the whole reason for inflation. Anyways, I wasn't talking about paper money, I was talking about electronic money. *shrug*

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