19

I think you need to mentally separate money in the sense of actual currency from value (which is sometimes expressed in terms of units of currency). Value can vanish, or change. Money can't vanish (unless you lose it in the sofa cushions!) I can give you $100 for a used sofa. You get to have that $100 even if my cat pukes on the sofa and causes it's value ...


18

In a word: budgeting. In order to have money left over at the end of the month, you need to be intentional about how you spend it. That is all a budget is: a plan for spending your money. Few people have the discipline and abundance of income necessary to just wing it and not overspend. By making a plan at home ahead of time, you can decide how much you ...


9

A central bank typically introduces new money into the system by printing new money to purchase items from member banks. The central bank can purchase whatever it chooses. It typically purchases government bonds but the Federal Reserve purchased mortgage-backed-securities (MBS) during the 2008 panic since the FED was the only one willing to pay full price ...


8

It's "unrealized" value that vanishes. Nothing changes from a money supply standpoint. Joe buys a stock from Ben for 100 dollars, then the price crash to 20 dollars. Well Joe still have the 100 dollars it is only Ben who lost 80. You have it backwards - Ben still has $100. Joe now has something that's "worth" $20 instead of $100 so he has a paper loss of ...


7

A technique that is working pretty well for me: Hide the money from myself: I have two bank accounts at different banks. Let's call them A and B. I asked my employer to send my salary into account A. Furthermore I have configured an automatic transfer of money from account A to account B on the first of each month. I only use account B for all my expenses ...


5

First remember that these are very broad factors and are not meant to be hyper-accurate. money like coins and change which never make it to the banking sector such as informal employment like hiring illegals or babysitter. This would be M1 money - cash in circulation. This is not "reported" but the fed know how much cash and coin has been printed and ...


5

One important answer is still missing: governments may not be able to do print money because of international agreements. This is in fact a very important reason: it applies to the entire Eurozone. (I admit that many Eurozone countries also not allowed to borrow as much as they do now, but somehow that's considered a far lesser sin).


4

Entire books have been written on how to get to the end of the month before you get to the end of the money. It's a very broad problem. But in your case, let me point out that your salary never "suddenly disappears" (unless you're paid in cash and it blew away or was stolen while you were sleeping.) You spent it. For a month, monitor your spending. One ...


4

There's something called the "greater fool theory of economics", which sets forth the premise that the goal of investing or trading is to find someone who will pay you more for something than you paid for it -- that makes them the "fool", although I don't think it is necessarily foolish to see value and opportunity in something that another person has missed....


4

The balance sheet slightly increased recently, but the general trend has been toward smaller. You can see the balance sheet (and other great data) on the website for the St. Louis Federal Reserve: https://fred.stlouisfed.org/series/WALCL Edit: Yes, the fed receives the principal payments. Otherwise, the Fed would have large losses on the purchases. The ...


4

There may be more eloquent answers that reference banking system (fractional reserves) and monetary policy, but pragmatically I would say because there doesn't need to be enough physical currency to represent the sum total of everyone's wealth. Think about yourself - how much physical currency do you have compared to your total wealth? Most likely it's a ...


3

For example Joe buys a stock from Ben for 100 dollars, then the price crash to 20 dollars. Well Ben still have the 100 dollars it is only Joe who lost 80. Before the transaction, Joe has $100, and Ben has a tulip bulb. Joe buys the tulip bulb from Ben for $100, with the hope that he'll be able to sell it for a higher price later. After the transaction, ...


3

For every buyer, there is a seller so the amount of money involved always remains the same. Money just changes hands, regardless of what happens to the price of the stock. The money supply remains the same even with frictional costs (commissions, B/A slippage, etc.). For example, there are 3 people (A, B, and C). Each one has $10 and A owns the stock. That’...


3

A trick that works for some folks: "Pay yourself first." Have part of your paycheck put directly into an account that you promise yourself you won't touch except for some specific purpose (eg retirement). If that money is gone before it gets to your pocket, it's much less likely to be spent. US-specific: Note that if your employer offers a 401k program with ...


3

"Makes sense" is dependent on the available alternatives. Imagine that you are able to save $100 a year. If you have a 0% inflation rate, after a year you have $100 of "value". If you have a 100% inflation rate, after a year you have $50 of "value". Now, in either of the two scenarios, would it "make sense" to just burn the money? No. Even if the worst ...


3

The government could actually do either one to expand the money supply as necessary to keep up with rising productivity / an increased labor supply. The question is merely political. In the case of the US, printing money involves convincing politicians to spend it. While we currently run a deficit, there is a large lobby within the US who are incredibly ...


3

Scenario 1 is typically the better description. If commercial banks were allowed to simply "create" money, they wouldn't be in the mess they're in now. In the U.S., the central bank is the Federal Reserve or Fed, and is the only entity (not the government, not the banks, not the people) that is allowed to create money "out of thin air". It does this ...


2

First pay yourself. When you get salary, send some parts of that (for example 10%) to your saving account. Step by step you'll save nice money ;)


2

In the US, The Treasury Department and The Federal Reserve (aka "The Fed") jointly act to control large parts of the money supply in a variety of ways, and thus keeps track of this and reports much of the information in their official statistics. The Treasury Department print and destroys money through the various currency mints it runs in the US - but ...


2

I'm afraid there is a misunderstanding on the OP: With high inflation money loses its value, but when inflation becomes small again, money just stops losing value, but it doesn't regain its previously lost value. Therefore, saving money under high inflation is not a sensible decision. When inflation is very high and you can't save your money in a bank ...


2

By your logic, if a loan of £100 is new money dilutes your purchasing power, then the repayment of £110 is a reduction of the money supply that increases your purchasing power. Indeed, ultimately the increase in purchasing power upon repayment is greater than the initial reduction, so you are 'better off' every time a loan is made and successfully repaid. ...


2

You could speculate about the size of the price change but it would be no more than an inaccurate guess. The buy side size and depth would be listed in the order book. That would be the starting point of how much stock offered by buyers that has to be taken out. The problem with that assumption is that there are many hidden orders. Such orders display ...


2

You are asking about the Money supply, this is a statistic kept by the US Federal reserve: M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) traveler's checks of nonbank issuers; (3) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S....


1

Once word gets out that a key member of a large company is selling their shares, then it doesn't matter if they were selling slow or selling fast. The news of the sales will be what drives the market. Because of SEC regulations even if they are able to discretely sell a significant number of shares without being noticed, when they file the required SEC ...


1

Money vanishes from the financial system when you pay back bank loans. The stock market is unrelated to this. Simply put, there are three different types of money in the financial system: physical currency (created by the government), a form of special electronic currency that the banks use to transfer money between themselves (also created by the ...


1

The Feds are the only institution that creates (or destroys) money, and they surely have a ledger where they note down how much they printed. That's all that is needed to know the exact total at any time. Note that borrowing seems to increase the total amount of money all people together have, but that is not true - someone gets the borrowed money, but ...


1

As SJuan76 noted, "cash under the mattress" doesn't gain value unless the inflation rate is negative. In looking at the inflation chart (which is a rate of change of prices), you might be implicitly thinking of it like a chart of the price index itself. If prices looked like that (a peak followed by a long decline), then indeed inflation would be negative ...


1

I don't think that is a good representation of the money supply. As far as I can tell the only net credit to the base money supply is through treasury bonds and specifically the coupon payement on the treasury which has been extremely flat for 2 decades compare to the mid 80s under the vulcan and Reagan administration. Also considering that if the coupon is ...


1

After 1971 (Nixon Shock), dollar was decoupled from gold. Hence, by definition, US Dollar is "fiat money". Since a currency as powerful as dollar is technically "fiat money", I don't think you have to make guesses regarding other currencies. After 20th century, most are legal tenders backed by governments. Cryptos are criticized by economists because they ...


1

"Envelope budgeting" is pretty simple. It's easy enough that you can teach it to children, and flexible enough you can use it as an adult. The general idea is that you take your cash money (no bank accounts involved in the simple version), and stick it in envelopes marked for what it's supposed to be for. So for example, you get paid, you cash your ...


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