So if we have ten trillion dollars in circulation instead of just one (trillion - or even dollar), everything else remaining the same, one dollar will still have the same buying power? Then answer me: from where will come the additional nine trillion dollars in merchandise for sale? Does it get magically created along with the money?
At any given specific time, the money in circulation is always the same, but if you add all those income and spending together through a year, it will be a large number, but that large number only tells how many times the money has been turned over
Spend the same money 10 times won't make people 10 times more rich, just make them 10 times more busy
In FRB a run on a bank is the moment you realise there is more money in circulation than there is.
The purpose of a Central Bank is to be the lender of last resort, in order to prevent a liquidity problem created by a run on the bank. As long as the money velocity is high no one will notice.
There should be no doubt that Banks increase the money supply, the 10-1 FR ratio is the legal limit because it can be managed effectively.
