Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Join the forum, it's quick and easy

Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

Would you like to react to this message? Create an account in a few clicks or log in to continue.
Established in 2006 as a Community of Reality

Many Topics Including The Oldest Dinar Community. Copyright © 2006-2020


    Why is the cash issuance more dangerous than others?.. Dr. Salah Hizam

    Rocky
    Rocky
    Rocky
    Admin Assist
    Admin Assist


    Posts : 280892
    Join date : 2012-12-21
    • Post n°1

    Why is the cash issuance more dangerous than others?.. Dr. Salah Hizam Empty Why is the cash issuance more dangerous than others?.. Dr. Salah Hizam

    Post by Rocky Tue 22 Nov 2022, 5:49 am


    [size=30]Why is the cash issuance more dangerous than others?.. Dr. Salah Hizam

    2022-11-22
    [/size]
    [You must be registered and logged in to see this link.]
    [rtl]Dr. Salah Hizam wrote:[/rtl]

    Money Issuing, or as it is also called, Currency Printing
    It is practiced by many countries to obtain financing for their budgets when they cannot obtain real financing (borrowing, withdrawing from reserves, or selling assets).
    There is a difference between the two, as the cash issue in its broadest sense does not require the printing of a currency equal in its total value to the total cash issue amount. Where it is sufficient for the central bank to open an account for the government with the amount of the cash issuance agreed upon, then the government, in turn, opens accounts for the parties that wish to provide them with financing (such as a government ministry) and the ministry also pays from this allocation to the accounts of individuals and entities that deal with it, and individuals pay from These allocations entered their accounts to finance their purchases... and so on.
    And due to the progress of banking habits and the low ratio of currency in circulation to the total money supply (the ratio of currency in circulation to money supply may reach 2%, which means that the monetary authorities will not have to print more currencies and avoid the costs of that.
    Now what are the risks of that approach?
    The state has the absolute exclusive right to issue money in accordance with sound legal and economic rules. That is, issuing what is necessary to facilitate the movement of economic exchange and not exceeding that in order for the currency to retain its value because it is used as a store of value when people use it to save..
    Before the use of paper money, people used precious metals such as gold and silver in exchange. The absolute power was in the hands of the king, for example, to issue coins of gold or silver containing a certain amount of metal.
    The penalties were very harsh for those who attempted to issue coins outside the exclusive right of the king.
    The reason is the fear of a phenomenon called debasing
    It means: devaluation (currency) by reducing the content of precious metals.
    In the sense that the weight of the precious metal, such as gold, is engraved on the coin, but the actual content is less than the content engraved on the surface of that coin.
    Thus, the public lacks confidence in that currency, and people refuse to use it in commercial transactions.
    The king alone has the right to make a very small reduction on the imposed content of that coin in order to obtain some resources called: the minting right.
    In exceptional circumstances, some kings increase the amount of the discount and force people to accept it to finance some work such as wars or major construction works.
    Therefore it is said:
    "The king was forced to devalue the coin."
    Now, in returning to the modern world, which is the world of paper currencies, the authorities' recourse to cash issuance to finance government spending leaves an effect similar to reducing the gold content of old currencies.
    It reduces the actual purchasing power of money and causes erosion in the savings of individuals that they put into that money and calls on people to stay away from it.
    It leads to inflation that results from an increase in the rising money supply that chases a limited amount of goods and services.
    This leads to an inevitable decrease in the purchasing value of fixed wages and salaries, and pushes people to strike to demand higher wages if the right to strike is available to them, or pushes them to endure silently if repression awaits any protests.
    If the country's currency is local and not negotiable outside the country's borders, such as the Iraqi dinar, then this widespread issuance of the currency increases the level of demand for hard currencies to finance imports, which reduces the value of the local currency towards hard currencies, as happened with the Iraqi dinar in the mid-nineties when it became one dollar It is equal to three thousand Iraqi dinars (meaning that the value of the dinar against the dollar decreased by 1/10,000, approximately one to ten thousand, since the nominal value of the dinar was 3.3 dollars).
    But if the currency is used in international settlements, such as the dollar, the euro, and the pound, then the effects of the monetary issuance of those currencies are more dangerous for the mother country and the world.
    Most countries of the world keep their reserves in these currencies and the value of those reserves will inevitably deteriorate by the deterioration of the value of those currencies.
    An important part of the inflation experienced by Western countries, especially Europe and the United States, is due to the widespread monetary issuance that took place during the Corona pandemic, which those countries carried out to compensate individuals for the compulsory disruption of economic life and the decline in tax revenues as a result of the closure of economic activities.
    However, few researchers and media professionals tend to talk about this and try to attribute it to other factors, such as the Ukrainian war, high energy prices, supply chains, and others.
    Although these factors contributed to that inflation, but it is not alone.
    The United States had pledged to the world, and in order for the international community to be reassured of the commitment of the United States, that it would not resort to issuing cash and that it was ready to pay gold in exchange for its dollars to any party wishing to exchange the dollars it had for gold and fixed the price of an ounce of gold so that the dollar would remain with a constant gold content .
    So the world agreed to regard the United States as: the world's banker.
    But it broke that commitment in 1971 when President Nixon abolished the gold standard and decided to float the dollar and gold.
    [You must be registered and logged in to see this image.]Dr. Salah Hizam
    [You must be registered and logged in to see this link.]
    • Back to top
      Current date/time is Sun 17 Nov 2024, 3:11 am