What is seigniorage?
Investopedia explains 'Seigniorage'
"Seigniorage may be counted as revenue for a government when the money that is created is worth more than it costs to produce it. This revenue is often used by governments to finance a portion of their expenditures without having to collect taxes."Explanation:
Seigniorage is simply the difference between the total nominal value of new bank notes introduced into the economy and the cost to print them.
It is a complete windfall profit to the Central Bank, i.e., to the country or the welfare of the people of the country where the new bank notes are introduced into the economy.
This windfall profit "without having to collect taxes" accrues to the welfare of the people of the United States of America from the eonomies of countries that are Dollarized, for example Zimbabwe, Panama, Ecuador and from all dollarization outside the US economy for an indefinite period of time while these countries are Dollarized and from all Dollarization outside the US economy.
Nicolaas Smith
Copyright (c) 2005-2012 Nicolaas J Smith. All rights reserved. No reproduction without permission.
Buy the Kindle ebook at Amazon.com for $2.99 or £1.53 or €2.68
No comments:
Post a Comment