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The Bank of England destroys between 10-30 billion pounds worth of notes per year (no longer fit for circulation). Sterling has other issuing banks too beyond B
by CraigJPerry 3y ago
The Bank of England destroys between 10-30 billion pounds worth of notes per year (no longer fit for circulation). Sterling has other issuing banks too beyond BoE. I don’t think it’s possible to measure 1m notes going absent by any observable metric.
Even if it were possible, the purchasing power wouldn’t change - you coffee shop wouldn’t reduce their prices but they might adjust staffing levels in an extreme case (not remotely likely to happen with £1mm diff in circulation)
- rich_sasha 3y agoAs a nitpick, presumably the banknotes destroyed by BoE are then replaced by other banknotes. But I agree this is likely unmeasurable.
- ttoinou 3y agoCorrect, it's the rarety of all others bank notes that is increased, increasing purchasing power is only one consequence possible but not the only one. By the way, being hard to measure doesn't mean it doesn't exist. And there are plenty of things easy to measure that are meaningless
- CraigJPerry 3y agoBank notes are not re-issued 1:1 with destroyed notes. >> being hard to measure doesn't mean it doesn't exist No in this context it does. Either you can measure the increase purchasing power or you can’t. And if you can’t measure it, it doesn’t exist in this specific case.
- ttoinou 3y agoMost economics consequences will never be measured ever
- CraigJPerry 3y agoI think we’d be getting into something akin to “homeopathic” monetary theory with that line of reasoning…!
- ttoinou 3y agoDo you only do stuff in life that you think will be able to measure a posteriori ?
- hilbert42 3y ago"The Bank of England destroys between 10-30 billion pounds worth of notes per year (no longer fit for circulation)." The difference is that when BoE destroys notes they are accounted for by either the issuing of new notes and or crediting their withdrawal with a bank-entry credit thus the money in circulation does not change. Burning notes willy nilly effectively reduces the amount of currency in circulation because the central bank thinks the money still in circulation and doesn't replace it. This is why in many countries defacing or destroying the currency is unlawful.
- yard2010 3y agoI believe he meant it's such a low number it wouldn't be relevant anyway - same as merging facebook accounts with wifey to not take that space on facebook
- mypastself 3y agoYes, but e.g. even though the gravitational force exerted by my body affects you only in miniscule amounts, it’s still there. (Miniscule until I manage to stuff my face with enough donuts.)
- hilbert42 3y agoRight, clearly burning a million or perhaps even quite some millions would have a negligible effect on the currency, similarly millions in counterfeit money would have to be circulated to actually destabilize the currency (that's assuming the dud notes aren't noticed first). Clearly, in modern times in modern democracies it's very unlikely that in any practical scenario that some entity would be capable of unofficially adding or withdrawing enough money from a currency to actually destabilize it, moreover in such an event the central bank/government would be onto it in seconds. It's however an altogether different scenario if the citizenry somehow has the perception that the currency isn't exactly what the central bank purports it to be. Just the notion that something may be wrong with the currency could destabilize it, hence hellishly tight laws to ensure this never happens.