On Sun, Oct 19, 2008 at 6:52 PM, Ian Kelly <[EMAIL PROTECTED]> wrote: > The number in circulation should be equal to the number required to > withdraw everything. If there are extra coins in circulation, the > excess are worthless. If there are insufficient coins in circulation, > then the coinholders have lost value.
I disagree. There are multiple ways for a bank's assets to exceed its liabilities; the liabilities going down in value is only one of them. Assets going up in value and trades that increase assets more than liabilities are other ways. Liabilities could also exit circulation temporarily. If there are "too many" coins in circulation, the liabilities must be either devalued or removed from circulation temporarily; if there are "too few", you can celebrate. --Warrigal of Escher
