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> If someone puts a big stash of dollar bills under their mattress, that does not interfere with real wealth being created. Yes it does! When cash is hoarded i
by alexb_ 4y ago
> If someone puts a big stash of dollar bills under their mattress, that does not interfere with real wealth being created.
Yes it does! When cash is hoarded instead of invested, it stops it being used for transactions that increase value. Imagine it happening at scale.
- radford-neal 4y agoCentral banks just print more money as needed to provide the amount needed to handle transactions. Or if they don't (or there is no central bank, if you're on a commodity gold standard), there is deflation, so the same amount of money as before can handle these transactions. Putting money under your mattress is a gift to society at large, as it means that you don't consume resources that you would have if you spent it.