What would be the downsides of each country having a constant net amount of currency?
In: 0
Because the amount of wealth, as in *actual tangible stuff* doesn’t stay constant either. People constantly build houses, roads, machines, movies, songs, paintings, clothes, etc etc. They create brand new value out of *nothing*, so we need to create money to represent that too.
If the amount of currency was constant you would have something called deflation which would be…really really bad. It would mean that instead of spending money people would just hoard it because it’s value would go up. People would stop buying stuff because they won’t want to spend their currency, which would grind the economy to a halt.
If you want an idea of what would happen if you never print more currency. Stocks are a decent approximation of that. Stock means you own a part of the company. So if a company has 100 shares of stock that and you own 1 share you own 1% of the company.
When said company first starts out that might mean you own 1% of a single factory but as that company grows and they now own 1,000 factories your one share is worth 10 factories.
People hold on to stock because it goes up in value.
Deflation is the opposite of inflation, which you have probably heard of. Inflation isn’t great either but it’s much less bad than deflation.
Latest Answers