On Oct 1, 9:03 am, wrote:
expectations. Whomever is holding the paper when the music stops loses,
but "the economy" didn't lose, in the above example, 200K, and no one
"created" money, it simply changed hands.

Nothing to disagree with in everything you wrote, except that the
classic definition of money is what you want to call "cash". Maybe you
want "Real Money" to mean actual value, but this too is vacuous as
there is only the present perceived value, which can wildly fluctuate.

http://www.investopedia.com/articles.../03/061303.asp

http://economics.about.com/cs/studen...es/f/money.htm

Since your examples were in USD, here's another: Suppose there are
100,000 USD in existence, and the government hires you to build a
bridge. At the end it pays you 1,000 USD, but since it didn't have it
before, it simply printed it. Now there are 101,000 USD in existence.
Voila, money was created. Now all of that 101,000 USD can take part in
all your scenario.

HTH,

Jon.