For example in Dark Knight or Gangs of London, what would be the knock on effects in the real world if 100s of thousands/millions was destroyed on the real world financial system?
In: Economics
Finances are primarily electronic now, even at a bank the amount of physical dollars is documented electronically. The bills themselves are worthless and can be reprinted. The only way I would see the destruction of physical money having a large effect would be if you keep your personal money in a mattress or somewhere else unofficial/uninsured where the amount isn’t legally documented. Even then it would really only effect that person
First of all it’s very illegal.
And then for the economy it highly depends on what that money did before. Was it rotting in some gangsters stash? Or was it intended to pay for something. Because if it was supposed to be used then demand for that good would crash (say the gangsters wanted to buy luxury cars from the drug money) wich means the sellers of those products have to lower their prices to still get a customer.
This keeps cascading through all parts of the economy and causes some deflation (decreasing prices, increasing value of money).
Though just burning some millions won’t make a huge dent, since there are trillions circulating in the economy. So the influence would likely be local and temporary unless you burn a much larger amount.
Also most of our money only exists in bank accounts. Cash is just a tiny fraction
They print more.
Paper money is supposed to represent a value of gold. Not always the case. Theoretically, a nation could print up unlimited amounts of paper money, but it won’t be worth anything if there isn’t a gold reserve (or other reserve of value) to back that up.
Latest Answers