If you’re not careful, the nominal supply of money can often change.
Let me take you back to my first example, which I gave at the beginning of this article. I mentioned the monetary system in which we live. But it isn’t just that we have fiat money. When I said that the nominal supply of money is determined by the actual amount of money in existence that we have actual physical currency. That is, the amount of money in existence is the nominal supply of money.
If you’ve been paying attention to news stories about the current economic crisis, you know that we are now in a situation where the nominal supply of money is the amount of money in existence. In other words, if there are any, they are the number that we have. When people talk about the “real” supply of money, they talk about the number of actual fiat currencies in circulation. This, however, is usually not the case.
The real supply of money is a calculation that is not tied to any particular fiat currency. In other words, its just the total money supply.The current monetary system in the US is based on a system of paper money. The Federal Reserve has the authority to issue money, but it must rely on the authority of the U.S. Government to create the money supply.
The fact is that the US dollar is the only fiat currency that is issued by the Federal Government. This makes it the most powerful currency in the world because it is backed by the actual value of paper notes. The paper money system is based on the assumption that the Federal Government will spend the money supply in the same way that it will consume it. This assumption is flawed however. The Federal Government has no mechanism to produce the actual money supply in a way that is not inflationary.
The Federal Reserve (or Federal Reserve Bank) is a central bank that controls the money supply. This means that it controls the quantity of the actual money supply that is issued by the Federal Government. The Federal Reserve does this by buying and selling government bonds. The Federal Reserve then uses those bonds to determine the value of the actual currency.
This is a problem because it means the Federal Reserve can artificially inflate the money supply in ways that make it appear to be less than the real money supply. The Federal Reserve is also the primary lender of last resort in the U.S.
This is a major problem because if the Federal Reserve artificially inflates the money supply, it will cause the price of the U.S. dollar to rise. This raises the cost of all goods and services that the U.S. government has to purchase because the money supply will be less than the real money supply. This could have a major impact on the U.S. economy because the U.S. can’t buy imports from overseas because of the inflation.
