Mitchy260

Apologies for what may seem like a daft question....

What happens to newly printed money? How does it become legal tender, and who then 'profits' from this money? If they printed off £500m off in £100 notes, who gets them? Who gets £500m richer?? Does it work like this?

Why dont they just print off lots off money to pay national debt off There's obviously a good reason? Money becoming worthless at a guess, ie like Zimbabwe at the moment? $5m dollars or whatever currency they spend for a bottle of water?

Just sat here bored at work and its a question i do not know the answer to

Mitch

myblackwrx

iTrader: (1)

I've recently hard some nice crisp notes (£10 + £20)from a Natwest cash machine.

PeteBrant

Precisely, if you printed off lots of money , then you would have an inflation problem - I.e. the value of the cash would be reduced.


Just a note on debt - Capitalism almost dictates that you should never be in surplus as an economy, an amount of borrowing is a good thing - to a point.

Eddie1980

Its run as an independent business.

Lots of info here...

Manufacturer and Distributor of Collector Coins, Medals, Jewellery and Gifts

Flaps

iTrader: (1)

Doesn't the amount of cash printed have to mirror the gold reserves we have? I seem to remember being told that when I was younger (or did I see it on Goldfinger? )

Eddie1980

No currency no longer has to be backed in full by gold, good job really Brown sold off most of our gold some years ago, at a very low price.

mrtheedge2u2

But if the money printed off never enters the domestic market could the government simply not use it to pay off the debt?

fitzscoob

Isnt it inevitable that the money printed would wind up back into the domestic economy at some point?

I dont see how you could ever maintain a safeguard against it returning.

cookstar

iTrader: (6)

Simple print billions of pounds woth of £11 pound notes.

Dieseldog

We should go back to using shells as currency - I mean, they're finite, so they don't affect inflation, can't be forged etc. etc.

< goes off to 'For Sale' section to make insulting offers on Snetters cars >

TelBoy

There are broadly four definitions of the money supply. Notes and coins is M0. The Bank of England produces monthly figures. Generally, brand new money just replaces worn out money, but occasionally the actual amount in circulation is adjusted. However M0 is the least effective method of controlling the overall money supply as it takes a long time to have any effect, plus it takes no account of bank accounts etc.

If they kept on printing money, then it would lead to inflation, as the purchasing power of the economy expanded. The process of actually getting the money into the system is via open market operations, such as buying back Gilts, offering repo facilities and so on (in conjunction with the Debt Management Office). In practice, in a modern economy, M0 is merely the amount of notes and coins the economy needs to function normally - it isn't used as a fine-tuning tool, and as such remains fairly constant.

ash002004

iTrader: (1)

lol at post before mine

neway...it goes straight into banks mate

Pete N

Interesting.
Out of curiosity, what would happen to the economy if we all went down to our banks and asked to have all our money out, in cash? Obviously there's not enough notes and coins to go around . . . so what happens then?

robby

Don't forget tatty notes are taken out of circulation when handed in to banks - these will then get replaced by new notes

PaulC72

they always refuse the ones I print off.

Maz

iTrader: (34)

It would collapse. Look at the Northern Rock fiasco, that's one bank out of many.

ash002004

iTrader: (1)

most legal fresh money goes into banks, some goes straight to casino's and bingo halls on cash orders, post office (royal mail) now receives a big part of it. crap notes like the guy a few posts before me said do get incinerated and are replaced, so really in all, britain has one certain value within economy, this wont grow much but depending on debt and what goes out.... most goes out electronically and doesnt actually take form of an actual note. billions of pounds are on the internet and are just there....in bank accounts etc, therefore not needing to be physically madeinto a paper note...if this makes sense