[Show all top banners]

Replies to this thread:

More by Oh_Gaathe
What people are reading
:: Subscribe
Back to: Kurakani General Refresh page to view new replies
 Does it affect the economy?
SAVE! for ease of future access.
Posted on 12-16-13 12:13 AM     Reply [Subscribe]
Login in to Rate this Post:     0       ?    


I have a hypothetical question. If you have $5 BILLION in cash and you lock that money away in your own basement such that you don't use it at all. I am sure that is significantly going to decrease the amount of cash available for circulation. How does it affect the economy?

P.S. I am not a business major. Just curious to know about such a peculiar situation.
Posted on 12-16-13 12:47 AM     [Snapshot: 19]     Reply [Subscribe]
Login in to Rate this Post:     0       ?    

Okay depends how you get it. Let's say
Posted on 12-16-13 12:58 AM     [Snapshot: 22]     Reply [Subscribe]
Login in to Rate this Post:     0       ?    

Okay there is $1.4 trillion in circulation. To put that in perspective apple has $140 billion in cash pile worldwide and out of which $40 in USA. Microsoft has almost half of what apple has.

So $5 billion is still relatively low. But if you were to take that out all at once from one industry at once. Let's say the fast food industry owes you $5 billion and you take all of it the fast food industry would have a significant impact with cash flows. They might not be able to pay their suppliers emoloyes and bills. So they might have to shut down their operations. There might not be much investments.Employees might lose their jobs and yes it might effect the economy.

But if you have $5 billion in bank and you withdraw and lock down in your basement, it will have no impact at all.

By the way how big is your basement?

Posted on 12-16-13 6:54 AM     [Snapshot: 95]     Reply [Subscribe]
Login in to Rate this Post:     0       ?    

Itroll is right but OP's question sound like the latter case; I.e. in a macroeconomic level how does not infusing an economy with 5B affect the economy.

First of all it depends upon which economy you are talking about. Regardless of how you got it, if you were to spend 5B in Nepal or Bhutan, It will affect the country's GDP. As for US it will have a very minimal effect in a 13T economy.
Posted on 12-16-13 7:50 AM     [Snapshot: 111]     Reply [Subscribe]
Login in to Rate this Post:     0       ?    

Three things, 1. Reserve Requirement 2. Money multiplier 3. Velocity of money. 5 billion becomes significantly larger if Reserve Requirement is low, money multiplier and velocity are high.
Last edited: 16-Dec-13 09:40 AM

Posted on 12-16-13 8:29 AM     [Snapshot: 127]     Reply [Subscribe]
Login in to Rate this Post:     0       ?    

Last edited: 16-Dec-13 09:35 AM


Please Log in! to be able to reply! If you don't have a login, please register here.



Within last 60 days
Recommended Popular Threads Controvertial Threads
What stocks to buy -- Any recommendation
हेरेको तिमीलाइ आँखाले हैन।
🙏 दलाल स्ट्रिट 🙏
Conservative discussions
KP and PK
The Great Himalayan Cable Car
Well this is fked #TPS status doesn’t allow application for Green Cards
हेत्छाकुप्पाको कथा (नेपाली लोक कथा)
म अम्रिकामा adjust हुन सकिन :(
RIP Ujjwal Thapa - US Return Nepali politician
नेपाली नाता
Going back home After 18 years
नास ब्रो इन टिक टक :)
१२ वर्ष अमेरिका बसेर रित्तै फर्केका यी युवा
Congratulations to Nimsdai and the team for a world record summit of K2 in the winter!
RNA vaccines have not been proven safe, and this mass immunization of healthy people is unwise
b1 visa ticket issue
Nepal ma chori haru le sampati khana paucha??
US Ambassador to Nepal interview
NOTE: The opinions here represent the opinions of the individual posters, and not of Sajha.com. It is not possible for sajha.com to monitor all the postings, since sajha.com merely seeks to provide a cyber location for discussing ideas and concerns related to Nepal and the Nepalis. Please send an email to admin@sajha.com using a valid email address if you want any posting to be considered for deletion. Your request will be handled on a one to one basis. Sajha.com is a service please don't abuse it. - Thanks.

Sajha.com Privacy Policy

Like us in Facebook!

↑ Back to Top
free counters