0
This question could be interpreted in at least two ways and possibly more. It could refer to the original creation of money by the Chinese. It could also refer to the actions of the world's many central banks. For this present response, the latter will be assumed. One of the limitations of creating money is the challenge to not create too much of it. Creating more money than the value of the goods and services that the economic system produces is called inflating the currency. It's where we get the term "inflation." When people have more money in their hands, they can bid up prices. At the same time, when producers know people have more money, they can raise prices. The sorry thing is that when the prices go up, the value of produced articles has not gone up absolutely; it has only gone up relatively. This can give people a false sense of 'getting ahead,' when in fact, they're still in the same place... like Wonderland. Banks respond to inflation by raising interest rates, thus slowing down commerce, especially the real estate and construction industries. So, many times, when the objective is to prime the economy with a shot of "extra cash," that action ultimately has the opposite effect. Of course, the people getting the biggest bang for their buck are the people who first receive the new issues of cash. The US currently admits to a $17 trillion debt. The Federal Reserve is currently and openly inflating the currency through what it is calling Quantitative Easing. Pragmatically, the real limitations to the creation of money are the consciences, the morals, the ethics of those involved in the financial system. Without some form of moral or legal restraint, there is no limit to how much money can be created.
Wiki User
∙ 10y ago
Add your answer:
Earn +20 pts
What is the purpose of wealth creation?
The purpose of wealth creation is to have a nest egg in case of an emergency. By having money put aside you don't need to fall behind on bills and can pay for treatment.
What are limitations of stock exchange in economy?
There are two types of limitations of stock exchange in economy; economic limitations and personal limitations. Economic limitations refers to when companies back off from investing due to fears, and personal limitations refers to small investors not being able to impact the stock exchange by investing.
What are three limitations of bartering?
The three limitations of bartering are desirability, transferability and divisibility.
What are the limitations of using national income figures to compare standard of living?
It does not show the discrepancies of who has the money. A country may have a large income and show that average personal income is high, but that money may be in the hands of just a few while everyone else is in poverty.
What is the purpose of deficit financing in a depression?
Deficit financing results in Governments accelerating the flow of money into the system. This is mainly being done with an intention that availability of money would increase production and create more goods and there is a possibility of demand creation.
Does money have any serious limitations and what are these limitations?
Money cannot buy love or happiness. Money may help extend life, but it cannot prevent death.
What ar limitations?
weastage of money
Is there a statute of limitations in Oklahoma for receiving money from an inheritance?
A statute of limitations is related to bringing a law suit. As such, there is no such thing as a statute of limitations on an inheritence in Oklahoma.
What is the statute of limitations on coming back and collecting money owed for a loan that the balance was zeroed out but money never taken out of a checking account electronically?
There is no statute of limitations on federal student loans under any circumstance.
Limitations of credit creation in low developed countries?
Lack of economic activity. Second possibility of lack of regulated banking and financial system.
Which was a major reason for the creation of corporations?
to make more money
Which was a major Reason For The Creation Corporations?
to make more money
Was a major reason for the creation of corporations?
to make more money
Which was the major reason for the creation of corporation?
to make more money
How is innovation used in sustaining rapid wealth creation?
Innovation is used in sustaining rapid wealth creation because people are always looking for new ways to make money. By finding new ways to make money they can sustain their rapid wealth creation.
Is there a statute of Limitations on Local income tax for Ohio?
There is a three statute of limitation for the state and the localities in Ohio. They can not press collections, nor can they refund money are the statute of limitations has passed. If money was paid to the wrong locality and it is discovered at the statute of limitations has passed, the correct city must allow a credit for the amount paid to the original locality.
How long can they try to collect money from a repossessed car?
Until the Statute of Limitations tolls on the judgement.
