How does money get into private hands?

CplFerro · 21st February 2011, 05:44 PM

Dear JREF forum people,

I have already figured out that the dollar bill I hold, probably came from a mint. My question is, how did it get put into circulation, ultimately reaching me, after being minted? Does anyone know? I could take a guess but my knowledge of black magic is limited. Thanks in advance.

Cpl Ferro

The True Scotsman · 21st February 2011, 05:57 PM

Originally Posted by CplFerro

Dear JREF forum people,

I have already figured out that the dollar bill I hold, probably came from a mint. My question is, how did it get put into circulation, ultimately reaching me, after being minted? Does anyone know? I could take a guess but my knowledge of black magic is limited. Thanks in advance.

Cpl Ferro

The Fed takes the freshly printed money and purchases with it bonds from some few banks who are qualified to deal with the Fed. From there, the banks send the money into circulation through various avenues such as lending.

CplFerro · 21st February 2011, 06:15 PM

Originally Posted by The True Scotsman

The Fed takes the freshly printed money and purchases with it bonds from some few banks who are qualified to deal with the Fed. From there, the banks send the money into circulation through various avenues such as lending.

Dear TTS,

So, the dollar bill I hold, which I got from someone at a garage sale in exchange for my toaster, which that person got from...various avenues? I'm still not clear on how the dollar bill got from the mint to my hand. Could you explain further?

Yours,

Cpl Ferro

NewtonTrino · 21st February 2011, 06:22 PM

A company who needs change goes to the bank and says "Give me $500 in $1 bills, $500 in $5 bills etc etc. Then when people buy stuff you give them out as change. At least, I've done this myself so I know that's one way.

The True Scotsman · 21st February 2011, 08:33 PM

Originally Posted by CplFerro

Dear TTS,

So, the dollar bill I hold, which I got from someone at a garage sale in exchange for my toaster, which that person got from...various avenues? I'm still not clear on how the dollar bill got from the mint to my hand. Could you explain further?

Yours,

Cpl Ferro

Well, let's take lending for example. A firm might approach a bank requesting a loan to invest in new equipment. If the bank accepts the request, money is transferred to the firm which will spend the money on equipment. The firm producing the equipment will spend part of that money on wages which will partial be spent on groceries, etc.

ETA: ...or partial spent on toasters at garage sales.

drkitten · 22nd February 2011, 08:23 AM

Originally Posted by The True Scotsman

Well, let's take lending for example. A firm might approach a bank requesting a loan to invest in new equipment. If the bank accepts the request, money is transferred to the firm which will spend the money on equipment. The firm producing the equipment will spend part of that money on wages which will partial be spent on groceries, etc.

Of course, most of that money won't happen via cash, but via check or electronic transfer. I don't know anyone who's ever gotten loan proceeds in cash.

But anyone who has an account at a bank can ask for cash (from his account). And anyone who deals with cash on a regular basis (like shopkeepers) can and will ask for cash to put in the registers.

So the simplest path is probably from the Mint, to the Fed, to the local bank, who puts it into an ATM from which you withdraw it.

LarianLeQuella · 22nd February 2011, 08:31 AM

If the Republicans and major corporations had their way, it wouldn't.

/snark

The True Scotsman · 22nd February 2011, 08:38 AM

Originally Posted by drkitten

Of course, most of that money won't happen via cash, but via check or electronic transfer. I don't know anyone who's ever gotten loan proceeds in cash.

But anyone who has an account at a bank can ask for cash (from his account). And anyone who deals with cash on a regular basis (like shopkeepers) can and will ask for cash to put in the registers.

So the simplest path is probably from the Mint, to the Fed, to the local bank, who puts it into an ATM from which you withdraw it.

Yeah, that's probably a better example.

21st February 2011, 05:44 PM	#1
CplFerro Graduate Poster Join Date: Jul 2005 Posts: 1,383	How does money get into private hands? Dear JREF forum people, I have already figured out that the dollar bill I hold, probably came from a mint. My question is, how did it get put into circulation, ultimately reaching me, after being minted? Does anyone know? I could take a guess but my knowledge of black magic is limited. Thanks in advance. Cpl Ferro

21st February 2011, 05:57 PM	#2
The True Scotsman Muse Join Date: Jan 2010 Location: In Great Birnam Wood, high on Dunsinane Hill Posts: 864	Originally Posted by CplFerro Dear JREF forum people, I have already figured out that the dollar bill I hold, probably came from a mint. My question is, how did it get put into circulation, ultimately reaching me, after being minted? Does anyone know? I could take a guess but my knowledge of black magic is limited. Thanks in advance. Cpl Ferro The Fed takes the freshly printed money and purchases with it bonds from some few banks who are qualified to deal with the Fed. From there, the banks send the money into circulation through various avenues such as lending.
	__________________ I don't have enough faith to be an a-Thor-ist. There's just too much proof for Thor. Like thunder and stuff... All good pets have Stockholm Syndrome.

21st February 2011, 08:33 PM	#5
The True Scotsman Muse Join Date: Jan 2010 Location: In Great Birnam Wood, high on Dunsinane Hill Posts: 864	Originally Posted by CplFerro Dear TTS, So, the dollar bill I hold, which I got from someone at a garage sale in exchange for my toaster, which that person got from...various avenues? I'm still not clear on how the dollar bill got from the mint to my hand. Could you explain further? Yours, Cpl Ferro Well, let's take lending for example. A firm might approach a bank requesting a loan to invest in new equipment. If the bank accepts the request, money is transferred to the firm which will spend the money on equipment. The firm producing the equipment will spend part of that money on wages which will partial be spent on groceries, etc. ETA: ...or partial spent on toasters at garage sales.
	__________________ I don't have enough faith to be an a-Thor-ist. There's just too much proof for Thor. Like thunder and stuff... All good pets have Stockholm Syndrome. Last edited by The True Scotsman; 21st February 2011 at 08:35 PM.

22nd February 2011, 08:31 AM	#7
LarianLeQuella Elf Wino Join Date: Nov 2008 Location: 3rd Rock from the Sun Posts: 1,995	If the Republicans and major corporations had their way, it wouldn't. /snark
	__________________ My crappy blog that no one should be forced to read. Ever... But I like traffic and comments, so have at it if you please. Larian LeQuella Armyn ab Treanid

22nd February 2011, 08:38 AM	#8
The True Scotsman Muse Join Date: Jan 2010 Location: In Great Birnam Wood, high on Dunsinane Hill Posts: 864	Originally Posted by drkitten Of course, most of that money won't happen via cash, but via check or electronic transfer. I don't know anyone who's ever gotten loan proceeds in cash. But anyone who has an account at a bank can ask for cash (from his account). And anyone who deals with cash on a regular basis (like shopkeepers) can and will ask for cash to put in the registers. So the simplest path is probably from the Mint, to the Fed, to the local bank, who puts it into an ATM from which you withdraw it. Yeah, that's probably a better example.
	__________________ I don't have enough faith to be an a-Thor-ist. There's just too much proof for Thor. Like thunder and stuff... All good pets have Stockholm Syndrome.

21st February 2011, 06:15 PM	#3
CplFerro Graduate Poster Join Date: Jul 2005 Posts: 1,383	Originally Posted by The True Scotsman The Fed takes the freshly printed money and purchases with it bonds from some few banks who are qualified to deal with the Fed. From there, the banks send the money into circulation through various avenues such as lending. Dear TTS, So, the dollar bill I hold, which I got from someone at a garage sale in exchange for my toaster, which that person got from...various avenues? I'm still not clear on how the dollar bill got from the mint to my hand. Could you explain further? Yours, Cpl Ferro

21st February 2011, 06:22 PM	#4
NewtonTrino Illuminator Join Date: Jul 2007 Location: Bothell, WA Posts: 3,782	A company who needs change goes to the bank and says "Give me $500 in $1 bills, $500 in $5 bills etc etc. Then when people buy stuff you give them out as change. At least, I've done this myself so I know that's one way.

22nd February 2011, 08:23 AM	#6
drkitten Penultimate Amazing Join Date: Mar 2004 Location: Wits' End Posts: 21,647	Originally Posted by The True Scotsman Well, let's take lending for example. A firm might approach a bank requesting a loan to invest in new equipment. If the bank accepts the request, money is transferred to the firm which will spend the money on equipment. The firm producing the equipment will spend part of that money on wages which will partial be spent on groceries, etc. Of course, most of that money won't happen via cash, but via check or electronic transfer. I don't know anyone who's ever gotten loan proceeds in cash. But anyone who has an account at a bank can ask for cash (from his account). And anyone who deals with cash on a regular basis (like shopkeepers) can and will ask for cash to put in the registers. So the simplest path is probably from the Mint, to the Fed, to the local bank, who puts it into an ATM from which you withdraw it.