What determines the amount of money a country can print?

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A countries central banking system generally decides what amount of money a country can print. Contrary to popular belief, gold or precious metals are irrelevent and uncessary to give money a value. The only reason that gold (or other metals) have value is because people have accepted them as having value. Just as people may accept that an apple might have some sort of value or a banana might have some sort of value. Gold (and other metals) are a scarce resource and therefore had been accepted as a medium of echange long before paper money.

A medium of echange is necessary for two reasons.

1. People need to have a base from what to compare things to. That is, it is difficult to determine how many apples equal a banana or how many cars equal an airplane for example. We do however know that say an apple is worth $.50 and a banana is worth $.75.

2. People need a way to store their productive efforts so that they can be used in the future as necessary.

A country should generally wish that their paper money is still a scarce resource (that is the country's bank controls the amount printed and makes it difficult to copy). In this way money can be used to reimburse an individual for his production efforts and then he or she can use this money to pay someone else for producing something else they don't have but they need.

Generally speaking a reputable country will produce enough bills and coinage to 'meet demand' - naturally money is always 'in demand' so this means replacing bills damaged through use. In the case of the US it should be noted that most 'money' doesn't exist in the form of money, and as a matter of fact most currency is actually held outside the country by foreigners.
If too much money is printed or created holders may fear loss of value from dillution and start selling dollars to buy the currency of other countries. Like a stock the dollar will fall until foreign investors support it by buying American food, corporations, resources, and goods and services again.
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