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Let me explain. I get paid via direct deposit; I never actually see a check, much less actual cash. I then turn around and electronically send much of that money to companies so I can pay my bills. No actual cash ever changes hands. So, is that money actually real? I guess my question is: with all of the electronic banking that occurs today, how much of that can actually be turned into cash? Is there actually a bill or a coin out there somewhere that represents every cent in every person's bank account? Or are we simply trading on principle now?

2006-06-13 08:48:15 · 6 answers · asked by aldera22 3 in Business & Finance Other - Business & Finance

Ogplayh: that makes good sense, but is there enough money in the reserves for every dollar in every account?

2006-06-15 08:11:12 · update #1

6 answers

We're now working on the principle of "credits" or "points". You trade me so many points, I keep your lights on. Pretty soon we won't use cash and won't need credit cards... our financial history and information will be linked to our thumbprints (of course, we must fight against this!!) so you'll just give you thumbprint and walk out of the grocery store or pay your electric or whatever.

Technically, there are not enough bills or coins in the US to cover all the monies we use daily.

2006-06-13 08:52:55 · answer #1 · answered by Anonymous · 0 1

Even cash isn't real. It is just a bank note, just form of currency that is backed up by actual federal reserves(but in reality taht is even true anymore since the fed can print more notes than can be backed up in the fed reserve hence the Fed Debt that exists). So back to your original question, the banks, institutions, etc exchanges ownership of reserves. Since they actaully only keep the money they need on a daily basis in the bank itself, the actaul paper money exists in central locations where all banks store their money. So what transfers is ownership of money found in those reserves/banks.

2006-06-13 15:57:00 · answer #2 · answered by ogplayah 1 · 0 0

We haven't operated on the Gold Standard since the Nixon administration, when the dollar was set up as a currency. It's the same principle set up electronically. We operate on faith in the banking system and the Government.

2006-06-13 15:54:51 · answer #3 · answered by mkpaulk 1 · 0 0

Yes for every virtual dollar there is a real dollar and then some.

China holds the most American money outside the U.S. so if they every would use it for real transactions then our economy would suffer unless we all switch to virtual money.

2006-06-16 03:18:25 · answer #4 · answered by Man 6 · 0 0

I like your question

Though I 'm unable to answer it
let me take it one step further

We used to be on the gold standard
where precious medal backed every dollar

Coupled with your thought, now where are we?

2006-06-13 16:01:17 · answer #5 · answered by workinman 3 · 0 0

if being off the gold standard intrigues intrigues you.....think of this.....one of the reasons that happen in the downfall of an "empire" is coming off of metal-backed money....think Rome...think England(more specifically South Sea)...and think France (mississippi scheme)....

2006-06-13 22:21:52 · answer #6 · answered by justaguy114 1 · 0 0

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