Describe the currency we use today. (Us Funds)?

Question

-What are the benefits of this system?

-What are the drawbacks?

-What problems has this system created?

Answer 1

Ever since we went off the Gold Standard, a single US Dollar is much like a single share of stock in a corporation.  Nothing actually backing it's value other than the productivity of the company and the confidence in it's ability to continue productivity.

Of course the technicalities of the whole Federal Reserve System are quite complicated, and there are people who spend years in college trying to learn it all.

Advantage: Your money value isn't based simply on your supply of metal.

Disadvantage:  Like any other stock, it can rise and fall in value for many market reasons.

A good book to read: "Uncle Sam Cooks the Books"

Answer 2

-What are the benefits of this system?

A:  It gives the Central Bank (ie: Fed-Reserve) the ability to keep our financial system flexible. Able to inflate or deflate the currency as economic times dictate.

-What are the drawbacks?

A: You have built in Inflation. Its a question of managing Inflation at an acceptable level. But it will exist by default. Its also subject to "subjective human analysis" of the economy. If Ben Bernanke gets its wrong, we all suffer.

-What problems has this system created?

A: None, for the most part. This system allowed the Fed to cut the money supply in the 80s to break the back of 20% Inflation. It allowed the Fed to increase the money supply and spur the economy after 9/11. A flexible monetary system has more Pro's than Cons.

Answer 3

drawback is I dont have enough!