My answer to What would be the effects of someone decreasing the supply of the US dollar by burning $10 billion?
Answer by Desmond Last:
Interesting Question. It would depend in what part of the flow of capital liquidity ie the cash flow through the economy it was burnt. If the owner of a factory which needed it to invest in new equipment burnt it, then a lot more than 10 billion would be burned – as the US would not then have that 10 billion to multiply.
So in effect the 10 billion becomes a USAF missile which hits two ISIS in a truck in the middle of a bit of desert that nobody even knew was there, and therefore adds no value to the US economy,and can never be used again.
Every-time the US spends some of its $650 billion a year on missiles in the Middle East that have no effect – that is what happens and they cannot just print more – they have to borrow to replace it. Because the missile cannot make any money. If it is burned by a miser who hides it under his bed then the US loses the opportunity cost ie it has lost the opportunity to use that money to invest in production via say tax incentives US based production. It is the same as the $45 million dollars that Obama paid for a $500,000 gas station in Afghanistan – that money too was burned as nobody is able to find it and more has to be borrowed to replace it. So your question illustrates that the value of money is not just its face value – it is also its opportunity value.
Which Obama and Cameroin will realize when I sue their countries Australia and the UN for the opportunity I have lost in 8 years of being unable to write freely and use my work to make money for the people of the world I wanted to fund projects for
through loans not AID.
What would be the effects of someone decreasing the supply of the US dollar by burning $10 billion?
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