What are elastic money?

Elastic money is a term used to identify changes in the availability of currency and coins as changes in the economy. In many cases, it is also understood that the balance of control and savings accounts falls under the designation of elastic money. There are several backgrounds about the development of the deadline and how the cash supply is concerned in various economic climate. In principle, it was necessary to ensure that the reserves trusted by the government were sufficient to support the number of coins and currencies that were allowed to circulate. In order to deal with changes in the economy, the reserve would respond in a way that has been understood to prevent excessive conditions that would lead the country to a financial ruin.

The strategied basic employer with elastic money included the issue of additional currency during the expansion in the economic climate. By increasing the cash supply to consumers, this would help maintain the economy healthy. However, if there was a contraction in the economy, the reaction would be to limit the cash supply that wasin circulation. Reducing the amount of money supplies was considered a way to slow down contraction and restore a fairer economic climate.

There is some controversy how well the elastic money process has been managed in recent years. While some economists believe that strategies have worked with a considerable level of success, others have questioned whether the money supply has always occurred when the circumstances required the action. Others believe that the elastic cash supply system can artificially create circumstances that can lead to extremis inflation.