What would happen if the U.S. stopped printing money for 1 year?

Question

I'm trying to understand why we continue to print and coin so much currency when the value of it gets lower and lower.

Answer 1

As the economy continues to expand, there will be more and more demand for currency to transact those goods. But, if the supply is the same, then interest rates will need to rise to encourage people to be willing to less money than they would like. In other words, stocks and bonds will become more attractive, which will dampen the demand for liquid balances (money).

Answer 2

This really isn't to do with the money supply. The money that gets printed is to replace old money that is dirty and worn out. So if money wasn't printed for a year, the average dollar bill in circulation would be dirtier. Little would happen to prices - there may be a slight deflation (arising from the amount of 'lost' coins/bills not being replaced and raising the value of the remaining currency in circulation).

Answer 3

That's a good question, I wonder that myself a lot. I think that since there is already so much money in circulation, and people rarely have actual cash on them, that it would save a lot of energy, paper, ink, etc. I wonder if we could hold off for even half a year and be fine? Although it is necessary to have some coins and paper on you sometimes, like when the credit lines go down for example, or you want to add a tip in cash, it doesn't seem like it is entirely necessary to continuely print out new coins and money.

Answer 4

economics would dictate that lower money supply = higher interest rates... i.e since future expected growth of money supply is going to be nil, banks will be more hesitant to lend money, so they will charge a higher amount to lend that money (higher interest). Higher interest rates usually mean a higher currency exchange rate w/ foreign countries, but since there a host of other factors affecting the currency exchange rate such as inflation, sovereign risk etc., this may not be necessarily true.

Answer 5

the amount of money is depend on few factor such as:
product,capacity of market transaction in cash
government must try people to use credit card in their daily
expenditure

Answer 6

I don't know. next answer>