If I burn a $20 bill, where does the value go?

Question

If I were to burn some cash (as in light it on fire), where would the value of that cash go? What if I burned/destroyed a huge amount of cash? Would remaining cash increase in value (supply decrease)? Would non-cash monies change in value?

Answer 1

Technically, the value of the $20 bill doesn't "go" anywhere. Check out that line on all U.S. currency; "This Note Is Legal Tender For All Debts, Public And Private". All the paper money you've got on you is REPRESENTATIVE of that denomination's value, backed by the U.S. government since 1971.

Remaining cash wouldn't necessarily go up in value; the government regularly destroys old, worn-out bills (standard lifespan: 18 months) and, since the government can declare itself worth x dollars because it backs the currency, doesn't need to replace them.

Non-cash monies (e.g. gold) would retain their value because the value's inherent in the material itself. Paper bills don't have that advantage because the value's in what they represent, not in themselves.

Answer 2

The value of the cash is only the value that we as individuals place on the piece of cotton, paper mixture. If you destroyed a bunch of cash, you would destroying the physical value of it. We only place value on the physical sheet of whatever, so the value would be gone.

The remaining cash would remain of the same value. The supply would decrease, but cash is not a good, so it doesn't go by the rules of supply and demand. If I want money, I have a high demand for it, however I am not willing to pay money to get money.

The non-cash monies would not change in value.

Answer 3

If it was a bunch of money you were sitting on and weren't going to spend anyway, then it wouldn't change much. It would be the same as hiding a bunch of money in your mattress and not doing anything about it.

On the other hand, if you got a large percentage of people to start burning a large portion of the money they would otherwise have spent, then indeed the value of the remaining cash would go up (leading to a drop in the price of other things relative to the currency you just burned). This is based on the same principle that printing money causes inflation - destroying money causes deflation.

In any case, nothing real is lost if money is burned. You could take all the money, gold, stocks, and bonds in the world and toss them into a black hole and nothing that truly matters will have changed. All the oil, farm land, factories, office buildings, computers, and people remain. Goods you need to survive can still be produced. (It's just that the accounting will be a bit messy for a while until a new medium of exchange is agreed upon.)

Answer 4

Nothing would happen. While I cannot guarantee this, I suspect the Fed. compensates for destroyed/damaged currency. In any event, $20 is a drop in the bucket comparison to M1. A large amount of cash...maybe, but only for a very short period. More can always be printed.

Answer 5

Well if you want a logic ansewr, if you would burn all the dolares in the world usa would die nobody could buy or sell so no economi and the goverment citizens and every body would die, but if you would only burn half of the dolares in the world thing and stuff would be very cheap and the doalres would soar like crazy in value, its logic people want what they canot have.

Answer 6

Into raising the values of all the other dollars remaining. In other words, it would reduce inflation be an amount so small than nobody would notice.

Answer 7

chane in chemical substance

Answer 8

Up in smoke.

Answer 9

up in smoke...(: