Why man created money and which international organisation decides countries limited amount on money ?
Answer:
Money is easier to carry.
As to why limit the amount of money? There is no international organisation that says that a country can not just print money. It would be very foolish though. Germany tried this in the early 20thC to support a strike. The result was super inflation. Wages were re-negotiated daily.
Some South American countries have also experienced this problem.
Money, like any other commodity, is subject to the laws of supply and demand. If there is an abundance of the commodity available, then it will be less valuable than one which is in shorter supply.
The moneterists, like Friedman, claimed that the way to control inflation was to limit the supply of money (This is why interest rates are raised/lowered). Take the supply of moeny out of the equation, by making saving a more desirable option and you will help to fight inflation, since people will not be spending. It will aslo rise the price of the currency on the moeny markets.
Hope this answers the question.
It is easier to carry money to buy things than it is to carry cows or bushels of corn to trade for things
Does the IMF control that?
Money was probably created to end Bartering!
Also to be able to create supply and demand without anything. Before Money there was no banks was there? Sure there was gold evaluators and they did store gold for those that didn't want to carry it all over! When Bartering was comman if had lots of things you
were considered well off. Nowadays you can have lots of things and still be considered poor!
The one that created the first green backs that were vouchers basically caused the idea of money. Richard A Money refused to accept anything other than the green backs. People tended to like that idea cause they didn't
have to bring some item to barter for what they wanted! The creation of money lead to another problem people with lots of stuff they no longer wanted..so yard sales & garage sales were created!
Money is simply a "promise to pay the bearer on demand" as it says on the notes. Man used to trade items but found that the other person did not always want their fish or boar in exchange for bread so tokens were used instead. Simply printing money does not make a country richer. Germany in the 1920's had such high inflation that you needed a whole wheelbarrow of notes to buy a loaf of bread. While you were in the baker's someone would steal your wheelbarrow so life reverted back to bargaining.
The treasury decides how much money is in circulation in the US. This is determined by the amount of gold we have to back it and the rate of inflation. If there is too much money in circulation, the value of the dollar would decrease. And vice versa.
why because we need it to spend go out and enjoy our self also have to buy clothes and food
In theory any country can mint as much money as it wants, the problem being that if that country does not have the gold reserves to back up that money then the money becomes devalued and you get spiralling inflation.
Man created money to make transactions easier.
If we traded purely in terms of goods and services, then we'd need to have 'double coincidence of wants' that is what you want to sell is what someone else wants to buy, and what that person is selling is what you want to buy... Quite messy...
Also carrying goods around in order to trade (imagine trading in anvils!) can be quite difficult.
Money was therefore created to make our lives easier.
The amount of money in the world is not controlled by any international organisation. Rather, in most countries, the local central bank decides how much money to 'keep in circulation' that is leave on the market (known as money supply).
How much money the Central Bank decides to leave in circulation, or whether is wants to print more notes to put in circulation depends on its own policies.
Nowadays Central banks mainly use bonds to control the Money Supply. Want to have less money on the market, issue bonds so people buy bonds (which pay interest, a bit like a fixed deposit) and give the central bank cash that they keep. Want to increase money supply, do the reverse, use notes from the reserves or print new notes to buy back bonds people hold.
In extreme cases, the Central Bank can print notes and lend it to the government so the government say pays civil servants...
The amount of notes in circulation depends on the effects they have.
For example if there is more money in circulation, people have more money, and want to buy more stuff. Therefore, at the going prices, people want to buy more than what is available. This pushes prices up. This is called inflation.
In extreme cases, you will end up with huge inflation, and people being paid daily so they can spend before their wages lose too much value (in terms of what they can buy).
If there is less money, people spend less and so on...
Nowadays, there is an extra dimension to this game, that is exchange rates. Say the Central Bank buys back bonds, increasing Money Supply, therefore as people have more money, they borrow less and interest rates fall. Therefore people holding your currency may decide that it is not worth holding it anymore and decide to sell it. So your currency loses value with respect to others. Now if they think that your economy is doing real bad, they might decide to dump your currency, and this massive selling of your currency might lead to crises such as faced by South East Asia in 1997 where many currencies suddenly lost their value.
The reason why people decide to buy or sell your currency depends on the confidence they have in your economy. If they think your economy will do well, they will buy more of your currency and increase its value, and vice versa.
The Central Bank therefore has to take into account what happens to the exchage rate too when deciding how much money to allow in circulation. But the centrla bank cannot control everything, it has to decide what is its priority.
And this is how there is some international 'control' over the amount of money.
The beauty of the system is that it doesn't depend on the amount of resoruces you have (else Africa or the Middle Eastwould have the most money), but on what people believe.
If tomorrow, when everyone woke, we all thought that our banks will collapse, and we all go and try to withdraw our money from the bank. The banking system will collapse, the banks unable to repay us, so we lose confidence in the banks, and in money. So the value of money is nothing.
Similarly if everyone decided that say the Euro is worth nothing and decides to sell it to buy say swiss francs, then the Euro will indeed crash and lose its value (and the Value of Swiss Francs will soar).
The reserves any country has are simply not enough to stop a worldwide dumping of the currency. That is why some countries impose strict controls on trading in their currencies.
Therefore the value of money and therefore the amount of it available depends on what people think/believe. Isn't that beautiful/scary?
Think of this when you next pull a note out of your wallet...
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