Tuesday, January 02, 2007

Where does newly printed money go? (MSNBC)

How long can the government keep spending money it doesn't have?

Chris in North Carolina has been wondering: when the government prints up new money, where does it go? Rod in Texas wants to know: how long can the government keep spending money it doesn't have — before it has to shut down?

Can you explain what the government does when it prints money? How does it put that new money into circulation? Is all new money just replacing old money? How can money be introduced without somebody getting a lot of cash for nothing?— Chris, Raleigh, N.C.

To start off, you have to make a distinction here between “cash” (which takes many forms, including checks, advances on your credit card and electronic transfers) and physical currency — the paper or coins used to represent cash in a financial transaction. . . .

Full story at:
http://www.msnbc.msn.com/id/16328073/

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