How does the economy “grow”? Where does the new money comes from?
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Money is a tool to distribute goods. We can obtain a greater amount of goods by improving manufacturing processes, technology and efficiency. This may lead to cheaper products, superior products or entirely new products not available before.
We can often measure how well off we are as a whole by seeing how fast money is flowing through the market, since most of the time when money exchange hands, so are goods and services. For example, often times the real GDP of cities, states or countries are discussed rather than just the total sum of money (money supply) in existence. A growing economy is one that is spending money faster (higher money velocity).
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