How was each countries wealth decided?

Question

I know the reasons why countries cant just print extra money off to pay off their world debts etc, but how was each countries money limit decided?

Answer 1

The money supply growth and the value of the currency all depend on many factors. Population, GDP, Trade Balance, etc..

There is no right answer, it all depends.

Answer 2

There is no limit...it is a battle..........the more you print, the less people think it is worth...............

Build a strong economy........lots of exports............have an educated population.etc.

Answer 3

The amount money that a country creates is decided by the central bank and there are rules. However most countries try to  create only enough to keep up with the growth of their economy plus a little extra so as not to cause high inflation which is bad for the economy and causes the exchange value of their currency to fall. When comparing the wealth of nations  you must convert  all countries to a common currency using either exchange rates or purchasing power of the currency and  if  there is inflation or a drop in the exchange rate due to money creation the compared  ratio does not change even though the "wealth" measured in the country's currency will be greater

Money creation  in the economic since takes place mostly through the expansion of credit not the printing of currency. In the US the treasury will "sell" you new money  if you  send them a check and ask for it. This cause no change it the  "economic money" supply because your checking account already counts as money because you can purchase things with it.

Answer 4

it's based on the gold they have.

diamonds, oil, coal, & silver

these are commodetyes

Answer 5

Wealth is decided by something called "store of value," in other words, how much unconsumed goods does a nation have versus the ability of the population to purchase those goods. http://www.investopedia.com/terms/s/stor...

The amount of unconsumed goods is called  "Gross National Product [and] is the total value added from domestic and foreign sources claimed by residents of a country. In other words it is GDP (Gross Domestic Product, the value of goods and services produced within a country) plus net income received by residents from non-resident sources. GNP/capita is the total divided by the number of people in the country. In other words, GNP/capita is a measure of national income per person. "

http://ucatlas.ucsc.edu/gnp/gnp.html

If more money is printed than equals the value of the unconsumed goods, inflation results.

"“Inflation” is defined in the dictionary as “undue expansion or increase of the currency of a country, esp. by the issuing of paper money not redeemable in specie” (Random House Dictionary). It is interesting to note that the word “inflated” is defined as “distended with air or gas; swollen.”

"Inflation is not caused by the actions of private citizens, but by the government: by an artificial expansion of the money supply required to support deficit spending. No private embezzlers or bank robbers in history have ever plundered people’s savings on a scale comparable to the plunder perpetrated by the fiscal policies of statist governments."

"You have heard economists say that they are puzzled by the nature of today’s problem: they are unable to understand why inflation is accompanied by recession—which is contrary to their Keynesian doctrines; and they have coined a ridiculous name for it: “stagflation.” Their theories ignore the fact that money can function only so long as it represents actual goods—and that at a certain stage of inflating the money supply, the government begins to consume a nation’s investment capital, thus making production impossible."

quotes by Ayn Rand

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold."

Alan Greenspan, “Gold and Economic Freedom,”

Capitalism: The Unknown Ideal,

Gold is now legal to own in the U.S., but no nation uses gold or silver or diamonds to back up the value of it's money. Nothing at all backs up the value of money except the "good name and credit" of the nation in question.