I haven’t found a single resoruce, book as yet that puts things simply as the way they are. Where does money come from? Why do the general public work for it? Why is it that if Central Banks do it, it is legal and the general public does it, it is forgery or counterfeiting? Why are Central Banks given the authority to print the currency?
In: Economics
Money is a way to make it easier for people to trade goods. Before there was money, people would barter, so if you had a chicken, you would have to find someone else that had what you wanted and was willing to take a chicken. Instead, money became an intermediate good to trade that everyone is willing to accept.
People work for money because they need goods and services to live and they need money to trade for the things that they need to live.
Central banks are given the authority to print money because in the past, people chose banks to be the ones to regulate the monetary system. They could have chosen a different agency, but they chose central banks, and having one authority reduces the possibility of confusion, etc.
It’s illegal for the general public to print money because it would cause people to not be able to trust that your money was legit, so it would make it hard to trade money for the things you need and the whole economy would slow down.
The central bank doesn’t create money out of thin air, they have to take out loans or buy treasury assets. Banks can’t just print more money for poor people because it would shift the demand for goods up, while the supply would not change, so the price of goods would just increase. Basically, printing more money would not solve any problems, it would just cause inflation.
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