Why does the government have to create money?

Answer 1

Money has been evolving since slavery ages. Nowdays, money has essential functions in our society

1. Medium of Exchange: acts as a medium of exchange – hence permits a time interval between buying & selling commodities; thus eliminates need for a ‘double coincidence of wants’ implied by bartering, as one can sell G&S without simultaneously purchasing. (Most imp.)

2. Store of Value: Able to perform function as Medium of Exchange because it retains value over time. (Though real value eroded at the rate of inflation – the higher inflation gets, the worse it performs this function.) – not perfect (infl…) but has advantage that in princip: readily divisible.

3. Standard of Deferred Payment: (closely related to Store of Value function) Loans & future payments are agreed & contracted in money terms, as money units are accepted as the means of settling future accounts. But money only adequate if prot. v. inflation so can be store of value.

4. Unit of Account: the unit of account in which prices quoted and accounting records kept. Not essential – could use other stable Numeraires – but advantage of divisibility. Using 1 commodity as unit of account has efficiency gains with regard to transaction costs – considerable reduction in number of independent exchange ratios needed compared to bartering: reduction in info needed for rational trading.

Answer 2

It doesn't. But if it doesn't, someone else probably will. First European paper money weren't money at all; they were bearer bonds issued by prominent banking houses.

Economies tend to grow over time; the amount of available goods and services increases. If money supply remains fixed, the prices will fall (this is called deflation). Holding cash will become a form of investment; the purchasing power of your money would grow if you just sit on it. Savings will flow into investment much more slowly (or not at all); in economist's terms, capital formation would slow down. In other words, as bad as inflation is, deflation may be even worse.

Answer 3

it is a source of control and a way to weed out (me) the people who dont have it the inferior hints why they want to tax the people who make less money more and give the people who have more even more it is crooked and it is the way they control who is top dog whoever holds the most money holds the most power.

Answer 4

beasuse if every one starts creating money every one is the richest man in the world

Answer 5

so we can use something to trade for goods. item trading is in its self to risky..
for example
im going to trade some one coke for a mirror
i could just drink the coke and fill the bottle full of black champagne there for cheating the person out of ther coke

Answer 6

because i read on a site somewhere that like 2 million dollars are destroyed every year or something.

Answer 7

so that people in the country will overcome poverty
and will be able to supply their most important wants like food,shelter,clothing,etc;

Answer 8

So that we can spend it.

Money doesn't grow on trees.

Answer 9

because you want it. it is easyer to trade money than outher things.

Answer 10

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