What is Elastic Money?
Elastic money is a term that is used to identify changes in the availability of currency and coin as changes in the economy occur. In many instances, the balances of checking and savings accounts are also understood to fall under the designation of elastic money. Here is some background on the development of the term, and how it relates to the control of the money supply in various economic climates. In the United States, one of the essential functions of the Federal Reserve System in its early days was to regulate the amount of money supply that was allowed to be in circulation. Essentially, this was necessary to make sure that the reserves held in trust by the government were adequate to back the amount of coins and currency that were allowed to circulate. In order to deal with shifts in the economy, the Reserve would respond in a manner that was understood to prevent excessive conditions that would lead the country into financial ruin. The basic strategy employed with elastic money
Elastic money is a term that is used to identify changes in the availability of currency and coin as changes in the economy occur. In many instances, the balances of checking and savings accounts are also understood to fall under the designation of elastic money. Here is some background on the development of the term, and how it relates to the control of the money supply in various economic climates.
