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Hoarding Money in a Piggy Bank can Damage our Economy

Updated on November 11, 2014
Lendell Sapphira profile image

A graduate of Bachelor of Science in Commerce (Business Management Major), I worked my way through multisectoral exposures.

Why do we produce money?

We produce money to be used as our country’s currency or bill of exchange. Primarily, money is used in business as a trading tool used in the exchange of goods and services. Without such monetary unit, imagine how it would be too hard for our businessmen to operate and our industry to move on and link with the outside world. Money is also used by these businesses as savings for future investments kept in the banks or other financial institutions.

How Much Money is printed?

A central bank of a country decides the quantity of money to be printed. Money printed must be enough to meet the demand for the currency. When quantity of money is no longer enough to meet the demands, our Central Banks produce more money in exchange for dilapidated or lost units. However, printing more money is actually bringing down its purchasing power. How can this be? When money supply is more and is in circulation, more people are gaining access to it, so there’s a lot of money to spend for. When there’s a lot of money to be spent for, the quantity of the products or services is decreased creating a high demand for them. This way the value of money in circulation is getting smaller when they are divided into the number or quantity of money produced. The opposite works when there is not enough money in circulation. Now, you see how critical is the decision making for our top level financial analysts and economists. They are the fore players in the game of economy.

Based on our understanding of these facts, we therefore need to have a balance in the both our money supply and demand for products and services. Money is printed just enough to meet the currency demand in the market. If the money is more, it will somehow lusts its real value. Central Bank people need to print only when replacing mutilated or lost bills or coins. For coins especially, the cost involved in the production is always more than its actual face value. Therefore, every time, we intentionally damaged our money like putting some marks or hole in it, burying it in the mud or sand or fabricating it for another purpose, or simply hoarding it in a piggy bank, we are actually putting it out of circulation.

Do you know that saving coins in a piggy bank is like hoarding our currency and damaging our economy?

We always taught our children the value of thriftiness by saving in their piggy banks just the way our parents, had long ago taught us how to keep our money. Some even managed on keep it on the bamboo posts of their houses on a keg of their bamboo bed. However, how little do we know about the flow of our money in the currency market? All that we simply know is that it goes from one hand to another being used as our major currency exchange. How little do we know about the complexity of our economic channels. Apart from our economic and financial analyst or people directly involved or playing lead roles in all our monetary transactions, we don’t know the effect in our economy when we neglect the real value of our coins today. I would see that children dislike receiving coins with value below one peso. I was even surprises to see one beggar throwing away a twenty five coin that he was given to by a foreigner. Seldom nowadays can you see our valuable coins being accepted as a monetary exchange. Almost all of our businesses neglect to accept or recognized it, not knowing that they are harming our economy in the process.

With limited knowledge on economics, as it is not one of my favorite subjects way back in college (as I always find it boring), I am trying my best to understand it now. This interest was somehow ignited when I had my one month visit to Korea last 2012. While I was there, II noticed how they were so concerned with how they placed their bills in their wallet. Never can you find a crumpled bill anywhere, unlike in our country where people even write their phone numbers on it. This thing left unanswered in my mind but one day, I heard my Senior Pastor giving me the right answers to that certain question which had long troubled me. In one of his Sunday preaching, he tackles about this. From there I learn that for them, damaging their bill (I failed to mention that he is a Korean national) is equivalent to an economic sabotage for the real value of money is actually more than its face value.

How Can Money Supply Affects our Economy?

First, we had to define what “Money Supply” is. “Money Supply” is the actual quantity of money circulating in the hands of the people.

Every time there is a decrease in money supply, lesser amount of money goes to circulation and people had lesser money to spend. When money supply is greater, people had more money to spend. When people spend a lot, the demand for goods and services increase, resulting to high prices of commodities and services offered to the public or consumers. The opposite works when money supply is lower. This is the reason why it is very important that there must be a balance in the money supply and demand for currency in the market.

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Why we Must not Save on a Piggy Bank

Keeping the money in the bank and in the piggy bank are two different things with different results. Money in banks still goes into circulation while that kept or saved in your piggy banks had negative effect in the circulating market. Keeping your money in the bank is like hoarding it and depriving our country of its use. This way, it creates a negative impact on our economy.

Other ways of keeping money out of circulation is when you lost it or had it buried underneath the ground where it is totally out of reach of every one. One time, when I go the market, I witnessed a man skillfully pounding a coin and fabricating it into a ring. Everyone were so amazed by his skill that everyone began giving him coins to be instantly made into rings. Little did they know that this simple activity will have a great impact on our country’s economy?

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Final Words

Now that I have known of these facts, I realized how ignorant people are regarding this and that someone must make them aware of what they are doing and what they need to know. It should be that the government must take measures to prevent these things to happen further through a massive information campaign. It’s quite alarming in my country today that children, even those street children begging in the streets would not receive a coin below one peso. Not only children failed to realize the value of these coins. Even the business sector failed or simply neglect see this problem in our economy that needs to be realized sooner. When you buy in grocery, store or just anywhere, they don’t want a piece of your 25 cents. For them, a coin below one peso is better off somewhere. If this mentality would continue to go on and left unattended, where will our country be in the future and where would that leave our next generation?

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