Why is there more money in the world today than 100 years ago?

Question

100 years ago, there may have been £100,000,000,000 in the world. Today there is probably ten times more. Where does this money come from? Presumably, someone has to "add" money into the economy. Who does this, how do they do it, and why do they do it?

Answer 1

It's a matter of supply and demand.
New technologies have been discovered and health care level has rised. This caused population to increase. More people with more power&technology in their hands started to explore the world, dig the mines, develop more businesses, contact more frequently with each other, travel more. Variety in consumer goods raised. Fashion and popular culture urged people to buy more. Also unfortunately, people needed to spend more money on wars and weapons.
Simply, we are producing, buying and consuming maybe 100 times more than what our great grandfather did.
Literally, inflation rate and money supply have nothing to do with the increase in money amount. It's the reserve supply and consumption traffic that keeps bringing money out. Money is just the name of the action. Money certainly has to match in value with the reserve at the central banks of countries. Otherwise poor countries would press money for themselves to recover from economical crises they are going through. But that money would be just like a non-payable personal check.

Answer 2

Yo Teach's example is not an example of new money being created; only of how the same bit of money generates a lot of economic activity over time.

And money creation has nothing to do with the government "printing" money. That is a metaphor that is constantly abused. (That process merely provides fresh currency to help make already-existing money physically manageable.)

New money is created in a modern reserve banking system when a bank issues a loan. ie,
- you deposit $100 into your savings account.
- the bank puts aside $10 of that,
- and then loans the remaining $90 to another customer.
- At this point, you still possess $100, while the borrower now possesses $90 of new money (which may or may not be in the form of paper currency).

This is how money is created and added into the economy, by banks making humble loans.

Answer 3

As strange as it sounds, money in motion creates money. It works like this:

1) You buy a haircut from from the barber down the street named John. You give him a check for $5

2) John cashes the check and buys lunch from Juanita for $5

3) Juanita takes that $5 and buys new candles from Sally

4) Sally spends that $5 on shoelaces for her daughter from Lisa's shoe store

5) Lisa spends the $5 on new boxes from the big city down the highway.

So far, your $5 bought the following:
A haircut
Lunch
Candles
Shoelaces
Boxes

This is all worth $25 in total. So we can see that $5 spent and in circulation created 20 extra dollars in the economy.

Magnify this action times years and years and you get a growing economy.

Hope this helps.

Answer 4

Most money is just a record in checking account - it is very easy to create it by issuing a loan.

Plus central banks create money out of thin air, either by literally printing them, or giving loans to government.

Answer 5

Well, look at world population as well was world economics conditions.

In past population was lot and therefore the money was not revolving, not it is.
It is like putting money in CD
We start out with original money, then as time passes our money grow

Answer 6

The more goods are in trade ,the more money is in the circulation.The increase of the total amount of money in the World completelely depends on the things on the market.It doesn't grow on its own.

Answer 7

Money is only a token, a promise to pay. There are more people alive on Earth today than have EVER lived and consequently we need more tokens. Ok?

Answer 8

That's easy...the top money minder just prints more.
They con us into believing that if we don't work ourselves into an early grave to benefit the economy...our world will collapse...LIES

Answer 9

Why there are many peoples now, that 100 years ago ?

Answer 10

Governments print money. They can only print as much as other countries think they're worth, otherwise their currency starts to devalue.