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If he means money made of paper, then he's probably right, but wrong otherwise.

Case in point, the Bank of England now uses polymer banknotes for their current £5 and £10 denominations and will use that for higher ones in 2020. Many other countries have done the same for their currencies. Polymer notes are (reportedly) cleaner and stronger (allowing them to last longer) and safer (can incorporate more security features).

No, you are completely wrong - money is not just a neutral veil over barter. We moved on from this simplistic way of viewing money, over 80 years ago.

The creation of money, funds investment (about 97% of all money comes from bank loans, which then get invested), leading to the creation of new goods/services etc. - money is not a just a proxy for real things, it is a necessary requirement for their production, and neither does the value of money fall into an equilibrium, which is representative of the cumulative value of all goods/services - it's not that simple.

An economy the size of Russia's, can handle the creation of a mere $31 million dollar equivalent of funds, with virtually no repercussions whatsoever.

This is the fault of pretty much all economists - even the ones who 'claim' to be working with dynamic system (which happen to be based upon linear principles - such as DSGE):
Economies are not static/linear, they are dynamic/chaotic - like weather systems are (clouds do not move linearly, in straight lines, weather patterns are relatively chaotic).

So straight away, this concept is a massive failure. You can't model the future course of economies perfectly, anymore than you can model the future course of the weather perfectly - it will always have significant elements of unpredictability.

The way to maximize GDP, is to have a proper understanding of macroeconomics and the monetary system - something (especially the latter) which is sorely lacking among economists today, most of whom misunderstand critical parts of the monetary system (by e.g. thinking that banks lend out deposits - they don't, the money for the loan is created from nothing - *poof*, there goes a century of economic thought/practice, up in smoke...).

With a proper understanding of macroeconomics and the monetary system (i.e. a proper understanding of GDP itself and its influences), you can then see that the way to maximize GDP is to keep the economy at Full Employment - and permanently, not letting economic crises reduce the employment level...(which requires a government 'employer of last resort' program)

Anything less than that, will leave a significant Output Gap, and will be far below maximum GDP.

You are 100% wrong. Banks do not lend from reserves. Here is the Bank of England - the UK central bank - stating this: "...the majority of money in the modern economy is created by commercial banks making loans. Money creation in practice differs from some popular misconceptions - banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they 'multiply up' central bank money to create new loans and deposits"

Banks do create money.. Read it straight from the Bank of England!

http://www.bankofengland.co.uk...

It is exactly how it works. You will not find anyone actually responsible for running the accounting of taxation and expenditure who disagrees. But the most obvious way to realise it is the truth is to consider: how do I pay taxes if I do not first have money ?

This might help you understand where money comes from.

I never heard of the Bank of England,

Why don't you just visit their site instead of making yourself look like a fool?

News Release - Quarterly Bulletin pre-release articles: âInnovations in payment technologies and the emergence of digital currenciesâ(TM) and âThe economics of digital currenciesâ(TM) http://www.bankofengland.co.uk... and The economics of digital currencies http://www.bankofengland.co.uk...

News Release - Quarterly Bulletin pre-release articles: âInnovations in payment technologies and the emergence of digital currenciesâ(TM) and âThe economics of digital currenciesâ(TM) http://www.bankofengland.co.uk... and The economics of digital currencies http://www.bankofengland.co.uk...

That's pretty derpy. The government prints the bills, but they don't "print money" except in places like Zimbabwe. I'll admit it is a popular theme in right-wing media, though. So perhaps you've just been overly propagandized.

It is the banks that "print money" in the sense you meant it, not the government.

http://www.bankofengland.co.uk... is the document that most of us read last year. It was a bit of a bombshell, mostly because it admits things already known but in the past officially denied. But the old public version of how it works still has the banks creating the money, not the government.

See also: http://moneymyths.org.uk/pdf/W...

Cash is a real thing, bank deposits are just numbers on a ledger. There are some limits to the amount of money banks can create, but there is no mystical stock of money that they lend from. The stock of money has very little to do with how often that money flows around the economy each year. Don't mistake the level of debt and money, with the flow of that money as we measure it in GDP.

If you really want to understand how money is created I suggest you read this report from the Bank of England. Though there's probably a lot in there I'd disagree with.

Putting a WRITER on bank notes is weird. Stamps fine, but money should have Statesmen on them.

The queen is on the other side. The current £10 note has Charles Darwin on it, but the figure is replaced every 10 years or so.

http://www.bankofengland.co.uk/banknotes/Pages/current/default.aspx

forgot to include the link to the August 2012 CPI forecase - here it is. It's just meant tos how that economists are very well aware of the quality of their forecasts - blame the media for reporting a single number instead of a confidence interval.

Actually, on British Pound notes, it specifically states: "I promise to pay the bearer on demand the sum of x". Therefore, a digital copy should have exactly the same value. It's a promise of some money.

I think the most interesting chart is the one showing historical debt since 1692. It shows that the UK's debt was:
- continuously above 40% from about 1715 through to about 1880!
- continuously above 60% from about 1720 through to about 1870!
- continuously above 60% from about 1720 through to about 1860!
- continuously above 80% from about 1745 through to about 1855! More than 100 years, during most of which debt was above 120%!

So I don't think it's self-evidently true that high levels of debt are automatically unsustainable.

I agree that building up reserves is what ought to have happened in the NICE era. Instead, what happened was that tax cuts were put in place for the wealthiest, resulting in an enormous buildup of assets for the very wealthiest, and a huge real estate asset bubble for everyone else.

Re bankruptcy -- national economies have a history of bouncing back quite quickly from disorderly defaults. There's a good scholarly paper here:
http://www.bankofengland.co.uk/publications/fsr/fs_paper01.pdf

Bank of England inflation calculator

GBP15-20 in 1985 would be GBP35-47 in 2010. Blame your government.

1. Console game prices have always been higher than PC (and, earlier, home computer) game prices. When most of us complain about game prices, it's the PC games we're complaining about.

2. The real-terms cost of other forms of entertainment have dropped over the same period. At least where I am, a chart CD used to cost £15 and is now more like £10; according to the Bank of England inflation calculator [horrible flash thing] that's £25-£10 reduction, or a drop of more than half in real terms cost. Other forms of entertainment have reduced similarly. So, by comparison to the competition, games *are* more expensive.

If USD are anything like British Sterling (Bank of England specifically) banknotes, than the lowest denomination £5 note only has a lifetime of 1 year, and only 5 or more for the highest £50. So the window for replacement isn't that long. They naturally expire quite quickly.

Eh, doesn't really matter since nobody carries hundreds.

Move out of your parent's basement and get a job.

Would you see $100 bills even if you had a job? Pretty much the only time I see £50 notes being spent is by foreigners. Most people are paid electronically or occasionally by cheque, even people that are paid in cash likely prefer £20 notes. ATMs only dispense £10s or £20s.

(Banknote statistics -- 62 million £50s produced last year, compared to 498 million £20s and 400 million £10s.)

I'm thinking of Pounds Sterling (UK money) as that's what I have in my pocket (though not much of it) the scruffy fiver I have here does indeed say "I PROMISE TO PAY THE BEARER ON DEMAND THE SUM OF FIVE Pounds" [sic].

Here is the explanation as to why you still have on pound sterling bank notes. Apparently, it had also changed meaning: it used to mean that you could go and exchange the bank note for actual gold that was backing it, just as it did for U.S. dollars, but since you had ditched gold standard, it only means that Bank of England will replace your bank note with another bank note of the same denomination on demand.

I hope it's obvious how this doesn't really affect the nature of pound sterling as "real money" in any way.

I doubt mainstream media will pick this up, "evolution" is still very controversial stuff. They just virtually banned the current Darwin inspired film in the US.

Charles Darwin is on the back of the £10 note, he's hardly controversial here.

The Daily Mail calls Darwin, "the great evolutionist", and that's considered a conservative newspaper (Wiki: "The Mail takes an anti-EU, anti-abortion view, based upon "traditional values", and is pro-capitalism and pro-monarchy, as well as, in some cases, advocating stricter punishments for crime. It also often calls for lower levels of taxation. The paper is generally critical of the BBC, which it argues is biased to the left.")

I believe they're perfectly legal tender in the rest of the UK, but you get funny looks from people anywhere much past north England.

That isn't entirely correct, although in practice that is pretty much how it works. From here:

Are Scottish & Northern Irish notes legal tender?

In short 'No' these notes are not legal tender; only Bank of England notes are legal tender but only in England and Wales.
The term legal tender does not in itself govern the acceptability of banknotes in transactions. Whether or not notes have legal tender status, their acceptability as a means of payment is essentially a matter for agreement between the parties involved. Legal tender has a very narrow technical meaning in relation to the settlement of debt. If a debtor pays in legal tender the exact amount he owes under the terms of a contract, he has good defence in law if he is subsequently sued for non-payment of the debt. In ordinary everyday transactions, the term 'legal tender' has very little practical application.

The term legal tender does not in itself govern the acceptability of banknotes in transactions. Whether or not notes have legal tender status, their acceptability as a means of payment is essentially a matter for agreement between the parties involved. Legal tender has a very narrow technical meaning in relation to the settlement of debt. If a debtor pays in legal tender the exact amount he owes under the terms of a contract, he has good defence in law if he is subsequently sued for non-payment of the debt. In ordinary everyday transactions, the term 'legal tender' has very little practical application.

Until the M3 figures were pulled by the Fed, the dollar was inflating at around 8-10% per year. It's speculated that has increased since to around 15%. The Pound is inflating at around 15% per year and the Euro by about 12%.

http://www.ecb.int/press/pr/stats/md/html/index.en.html
http://www.bankofengland.co.uk/statistics/m4/current/

The CPI and RPI figures are there to keep the ignorant and stupid (That's you... Pick one) happy.

Currencies are becoming rapidly worthless, I recommend you avoid them.

The UK also has one million pound notes (~two million USD these days), though they are for "internal use only".

The big problem with USA notes is that not only are they the same size, but they are the same colour. There have already been studies showing the interpretation of text on a bank note is actually done after colour or size. This is why many countries use both size and distinct colour (blue vs green, as opposed to green vs some other shade of green) as clues to their different values. Examples: The EU bank notes does both, the UK bank notes are different colour, as are the Canadian bank notes are also of different colour. Add to all this the Australian bank notes, which are not only different colours, but are made out of plastic!!!

Macro forecasts are not worthe the paper they are printed on, my models were designed to interrpet when others were missing things like market share shifts and competitive advantages that...

Good for you. And when you get your fixed interest rate mortgage, when a company takes out a loan for investment, when you have a great investment idea but need to buy a cascade of 10 year futures (invest in a gas pipeline but want to invest in the quality of the management rather than take risks on anything and everything affecting the gas price and the second order effects on your investment) to mitigate your risk and make the bucks you planned, you are relying on macro forecasts.

They are broad-brush efforts, very rarely would a 'macro person' deny that. But they are essential to the modern running of our global economy. The point of 'analysts' [stock market analysts, rather than economic analysts] is to have ideas about individual companies, perhaps sectors vs. sector or region vs. region if pushed to it. Consensus Forecasts (which accumulate individual stock market analysts across companies, markets and countries) are laughable when looked at on a macro level, even more laughable than economist estimates. There are some excellent analysts, but they are usually the ones that accept estimation is, to varying degrees, educated guesswork, rarely will there be one sure choice; and if there is, that's because time, dedication, luck, restraint and insight have been combined.

If any readers fancy a quick run-down of macro economic policy, I recommend today's publication of the Bank of England Inflation Report, or more specifically, the live press briefing where topics are discussed in a straight-forward way. Hopefully Bernake will implement something similar at the Federal Reserve to improve on Greenspan's smoke and daggers approach to public statements.

Perhaps you're thinking of the Bank of England, the U.K.'s central bank. It was privately owned for most of its 300-year history, but has been government owned since 1946.

Up here in Scotland, we have our own paper money. Although its legal throughout the UK, a lot of english shopkeeps will give you funny looks if you give them a scottish fiver.

http://www.royalmint.com/talk/default.asp, and

http://www.bankofengland.co.uk/banknotes/index.htm , and finally

http://www.bankofengland.co.uk/banknotes/knowyourn otes.pdf

http://www.royalmint.com/talk/default.asp, and

http://www.bankofengland.co.uk/banknotes/index.htm , and finally

http://www.bankofengland.co.uk/banknotes/knowyourn otes.pdf

In Britain things are slightly different. Have a look at the Bank of England if you don't believe me. To quote:

"...legal tender is not a means of payment that must be accepted by the parties to a transaction, but rather a legally defined means of payment that should not be refused by a creditor in satisfaction of a debt."

Heh, fuck 'em, in England we're fearless, Darwin is printed on every 10 Pound note

Surprisingly enough google agrees with you, as your eddie george (a college drop-out who apparently runs around a sports pitch or something) (ok he went back to school to finish, which is admirable) outranks him by 18 places, and my one (who controls interest rates and the banking system of the united kingdom) only gets a mention at 19 for opening a building (!). google has spoken and I bow to the wisdom of the populance.

There must be some physical difference then. On UK notes, there is a small shape that is of a different texture than the rest of the note - the £5 has a circle, £10 has a diamond, £20 has a square, and the £50 has a triangle.

There must be some physical difference then. On UK notes, there is a small shape that is of a different texture than the rest of the note - the £5 has a circle, £10 has a diamond, £20 has a square, and the £50 has a triangle.

There must be some physical difference then. On UK notes, there is a small shape that is of a different texture than the rest of the note - the £5 has a circle, £10 has a diamond, £20 has a square, and the £50 has a triangle.

Probably not quite the intention, probably more something along the lines of:
Withdrawal of old 10 pound note design by the Bank of England

The note is still good, you just don't have the right to expect shops and retailers to accept it.
To get your money back you have to send it to the issuing authority instead.

The British do this. As other posters have pointed out... perhaps Britons don't fold their money as much. Then again, it is a higher denomination note - worth about USD$32.

" Actually, there are the colored bands that go through the paper with the denomination printed on them."

I believe British money has had a metal strip in it for many years. The Bank of England web site lists some of the security features: this is the £20 note.

If anyone is interested in the horses' mouths, here are a few references:

• US Bureau of Engraving: "All coins and currencies of the United States, regardless of when coined or issued, shall be legal tender for all debts, public and private, public charges, taxes, duties and dues."
  This statute means that you have made a valid and legal offer of payment of your debt when you tender United States currency to your creditor. However, there is no Federal statute which mandates that private businesses must accept cash as a form of payment. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise.
• Bank of England: The concept of legal tender is often misunderstood. Contrary to popular opinion, legal tender is not a means of payment that must be accepted by the parties to a transaction, but rather a legally defined means of payment that should not be refused by a creditor in satisfaction of a debt.
• Reserve Bank of Australia "...refusal to accept payment in legal tender notes and coins is not unlawful... If a provider of goods or services specifies other means of payment prior to the contract, then there is usually no obligation for legal tender to be accepted as payment....coins are legal tender for payment of amounts which are limited as follows.... not exceeding 10 times the face value if coins in the range 50c to $10 inclusive are offered; and to any value if coins of value greater than $10 are offered.