Few people think about the real value of money. Some consider money to be valuable, and some consider it to be cut paper. Both are right, as it all depends on the specific situation. To understand the true value of money, you need to understand some concepts.
What is money?
Now money for us is the result of labor. We do something and get a reward for which we can get the result of other people’s work. That is, the value of money is supported by human labor. This is true only in part. Some currencies are not just symbolic paper. Money must be backed by something of value. The dollar and many other leading currencies are backed by the gold reserves of their state. Ideally, the state should have enough gold to buy back all the money in circulation. In practice, this has not been the case for a long time. The economy of states is growing and it is simply impossible to support money with something.
Where does the money come from?
We know that the national bank of the state prints the currency of its country. But this is not just mindless printing of papers and minting coins. This is a very complex process, which is regulated by many structures. If you print too much money, it will begin to lose value. The process of issuing new money into circulation is called emission. This causes inflation and economic crisis. Therefore, this process is strictly regulated, and developed countries with good economies run printing presses to replace old and damaged banknotes.
How much does it cost to issue money?
If we do not consider the economic and political aspects, then we can roughly find out the value of money. And this is quite an interesting process. The cost of papers includes the price of special paper, which has security symbols and watermarks, the cost of ink, printing equipment, material transportation, employee salaries, and so on. But at the same time, the cost of each banknote before entering circulation is very small. So we get that the real price of $100 is about 12 cents. 1 and 2 dollars costs 5 cents per banknote. As you can see, the printing of small bills is cheaper than the face value of the bill, but not as profitable as the cost of the face value of large bills.
How do you deal with unprofitability?
If printing banknotes or minting coins becomes unprofitable, then a series of economic reforms are undertaken. Of course, this applies primarily to coins and small bills, since their signet is too expensive.
As you can see, creating money is not just printing pieces of paper. This is a very complex technological, political and economic process that many economists and financiers are engaged in, since the fate of not only the economy of their country, but the entire world economy may depend on it.