If you try to pay for something with a piece of paper you mites ran into some trouble unless of course a piece of paper was $100 bill

But what is it that makes that bill so much more interesting and available? Than other pieces of paper?

After all there’s not much you can do with it

You can’t eat it you can’t??build things with it and burning it was actually illegal

Of course you probably know the answer $100 bill is printed by the government, and a designated as official currency while other pieces of paper are not.

But that’s just what makes them legal, what makes $100bill??available on the other hand

Is how many of few of them are around.

Throughout history most currency including the US dollar was linked to valuable commodities, and the amount of it in circulation depended on a government’s gold or silver reserves, but after the US abolished this system in??1971 The dollar became what is known as fiat money.

Meaning not linked to any external resource but relying instead solely on government policy to decide how much currency to print.

So which branch of our government sets this policy?

The executive legislative or the judicial? the surprisingly answer is none of the above.

In fact monetary policy is set by an independent federal reserve system, or the Fed

Made up of 12 regional banks in major cities around the country, it’s board of governors which is appointed by the president and confirmed by the Senate reports to Congress and all of the feds profit goes into the US treasury

But to keep the Fed from being influenced by the day-to-day vicissitude of politics it is not under control of any branch government.

so why isn’t the Fed just decided to print infinity hundred dollar bills To make everyone happy and the rich well because it’s in the bios wouldn’t be worth anything .think about the purpose of currency which is to be exchanged for goods and service if the total amount of currency in circulation increases faster than the total value of goods and services in the economy, then each individual piece will be able to buy a smaller portion of those things than before this is called inflation, on the other hand if the money supply remains the same while more goods and services are produced each dollars value will increased in the process known as deflation.

So which is worse? Too much inflation means that the money in your wallet today will be worth less tomorrow make you want to spend it right away, so well this would stimulate business it would also encourage over consumption or hoarding commodities like food and fuel Raising their prices and leading to consumer shortage and even more inflation ,

But deflation would make people want to hold on to their money in a decrease in consumer spending with the reduce business profits leading to more unemployment and a further decrease in spending causing the economy to keep shrinking so most economist believes that well too much of either is dangerous.

A small more consistent amount of inflation is necessary to encourage economic growth, The Fed uses vast amounts of economic data to determine how much currency should be in circulation, including previous rates of inflation ,International trends and the unemployment rate .

Like the story of Goldilocks they need to keep the number just right in order to stimulate growth and keep people employed . Without letting inflation reach disruptive levels, The Fed not only determines?

How much that paper in your wallet is worth but also your chances of getting or keeping the job where you earn it.