jz curious about this.

everyyear, malaysia prints new currency notes.
if overprint, currency drops.

but US can print , print and prints,

actually who control the currency ?

world bank


sorry. wrong info

http://en.wikipedia.org/wiki/Central_bank

This post has been edited by 9876789: Nov 1 2009, 12:19 AM

zety aziz

malaysia dont print any of their money..only our coins they produce.

mine fell from the sky... lolz

Btw if im not wrong, they weigh the number of "gold" in the bank and total up it's value then divide by the total number of money notes they have?

what formula is that??

Please don't spam. Warning can be issued by staff if posit being reported.

Money printing is controlled by respective central bank for the need of market.

You don't need any backing like gold to print the money, central banks can print at their wish.
But it is stupid you print too much of it, as it drives down your currency value only, eventually printing more doesn't mean have more money.

I don't know why so many people have this kind of mis-conception of need gold to print the money, may be influenced by USD gold backing (which is prior 1970's era, since after 70's, there is none currency in the world is backed by gold.

It is always about self-controlled by central and print according to the market and economy needs and monetory policy.

I read somewhere that the each country central bank still have gold reserves to back the value of their currency. When you do not have enough gold reserves and yet you still print money like crazy, the value will drop, very much like the Zimbabwean Dollar. But then, of course market force also plays a major role in the value of each currency too.

erk

if malaysia economy getting better, then central bank print more currency,
money value mantained.

if malaysia economy stable, but print more currency, value drops.

if malaysia economy getting better, but dont print currency, value goes up ?

betul tak this concept ???

if this correct, then malaysia need to push its economy up in a rate faster than it prints its own money.

Correct me if I'm wrong, but money is nothing more than an IOU. The money on your hand, is equivalent to the value in which you owe others for their favour and services.

And do you know, the US is in trillions of deficit, and is inherited by the current generations of Americans?
Do you also know, the government buys money from the federal reserve/central bank (which prints money), and gives IOUs (aka bonds) in return for the money they got (created from thin air). The interests charged on the government can only be paid back by borrowing more money from the federal reserve/central bank, which incur even more debt in interests (plus compounding), hence the great debt US is in right now.

Also, a small percentage of money exists on printed form. Majority of it exists in digital form.

Currency that is not back by physical asset, ie gold and silver.
The final value will be zero.


History doesn't repeat itself, but it does rhyme.
Mark Twain.

I like the way you explain. Simple and true enough.

The question that lies within most people head is that how's the process in Malaysia? Is it the same?

i think the value of currency is based on reserve of gold for particular country, correct me if i'm mistake

I wondered why it has to be owe others of favor/services from the beginning..

My idea of why US can keep on printing money is they still controlling the economy. Many ppl are holding and trading in USD. Oil as well.

So if USD drops, many large corps or ppl will suffer hence the economy and maybe RMB can be the main trading currency in future.

I have a strong feeling that I'm wrong, please correct me

Lots of misconceptions here , first of all you need to know what the Bretton Woods system is. In 1971 the Bretton woods system was ended officially ended by the US and hence the end of the gold standard. Before that, you could walk into an US bank and convert your dollar into gold.

Nowadays the greenback technically has no intrinsic value because so much dollar is in circulation compared to their gold storage in Fort knox. Ppl will ask why US dollar still so strong then, there are a lot of reasons but the major ones are being the USA has been a world power for the past 100 years most ppl see the dollar as a safe haven to store their assets although. Every pension fund in the world has some sort of exposure to USA treasuries, therefore the demand is there for the dollar.

When you buy treasuries you are lending the USA your precious money. Look at China's communist government for the past decades keep on investing in US treasuries. But since the US dollar keep on depreciating, after interest on their treasury investments they still losing 'real' value on their investment.
http://www.guardian.co.uk/news/datablog/20...ow-big-who-owns

For Malaysia, our currency/sovereign certainly does not contain demand anywhere close to what the dollar commands in the international market. Our central bank can definitely keep printing money but then our currency will depreciate quickly. You will see increasing food prices, house prices etc because so much currency is in circulation.

Lately, there's been talk of our debt approaching 55% limit set by our constitution but the UMNO minister say no problem 2% more still far away!! If you travel a lot and go to other countries, you will find food prices in country like Singapore and Taiwan are cheaper than Malaysia although their GDP per capita is higher than us. This just shows you how uncontrolled spending and money printing creates inflationary economy.

Just look at Ah Jib gor, election near go every kampung and hand out money and promises for more $$. Where the money come from?? Surely our tax $$ already used up breeding cows, so the government issues sovereign bonds on the international market to borrow $$ to use.

Isingapore gov debt already reached 96%

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Added on April 1, 2012, 2:29 pmBtw
I don't agree on always compare "inflation" with singapore wan,why?
Let take example of 1 basic food
Example an egg distributor selling to retail shop in malaysia at RM3.50per pack(10 omega eggs),then retail shop sell to end-consumer here also in malaysia at RM4.50

So should the same egg distributior export the same egg pack to retailers at Singapore at SGD3.50(RM9.25)??? and singapore retailers should sell it to singapore consumer at at SGD4.50(RM11.25)????
Or is it standard practice to sell the 10-egg pack at perhaps SGD2.50(RM6.25) or even SGD2(RM5),right?

Can see the figure?its seems cheap by SGD value but it already give more profits to the malaysian egg distributor

Many people are getting the illusion of singapore's "low inflation" eventhough its not,since cannot compare RM and SGD wan,due to many of their food necessities also imported from Malaysia,and many of food price follows the malaysia"s production-costs,not singapore production-cost

Try to challenge the singaporean to produce their own omega eggs and see how much it costs

This post has been edited by e36.hartge: Apr 1 2012, 02:36 PM

First of all, you need to look at debt in the context of foreign & local debt. Singapore is very special in a sense that most of its government debt are owned by CPF, which is EPF in Singapore terms, they have virtually ZERO foreign debt. Using these debt, Singapore government companies like Temasek and GIC have for years generated outstanding returns on their debt. And that money will flow back to their retirees, benefiting their people.

And don't kid yourself Singapore's sovereign debt rating is AAA, the government has not sold bonds on an international market to raise funds since 20+ years ago. To argue that Malaysia's debt standing is actually better that Singapore just shows how myopic you are, really.



Do you even know what you are talking about? Your example is poor at best, but I roughly get your idea.

In economics we can price something in the nominal or real terms. For your egg example, selling for MYR5 or SGD2.5 does not really matter, because surely you can compare food prices in real terms. You can convert price in Sin dollar into RM using today's exchange rate and compare which is higher. If something that sell for RM5, which is SGD2 retails for SGD1 in Singapore, is it not cheaper? So a country that has higher per capita GDP, but yet food prices in REAL TERMS are cheaper than Malaysia, do you NOT see what the problem is?? If you still don't understand, go enroll in a basic economics class.

u the one already failed,not me
basic economics class dont tech the comparison i just quoted
sorry kid,u got much to learn

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Added on April 1, 2012, 5:30 pm& this why singapore imported much of their food especialy from malaysia
coz to produce their own food,the costs wil be much higher & directly will skyrocketing their basic necessity expenses,& directly will make overall expenses there much higher

This post has been edited by e36.hartge: Apr 1 2012, 05:30 PM

Wow you are officially an idiot, ok you have no argument whatsoever so you call me a kid, rofl.

Singapore has no incentive to produce food themselves, their service industry fetches higher profits so they can buy cheap food from Malaysia. Malaysia cannot come up with the same level of services so have to resort to lower $$ making industries.

Does this simple concept get through to your seemingly obtuse mind? And btw, get a dictionary and learn how to type.

If you are looking at the perspective of an exporter (originating from Malaysia) to say a country like Singapore (or any country that has a stronger country), yes they will be able to make better profits when they export even though those goods when subsequently resold can be cheaper at their respective market, but isn't this due to a strong currency which is determined in the open market. Bear in mind that back in the old days, Malaysia and Singapore's currency is about the same but it has appreciated tremendously against us. It surely must be something that other countries want from Singapore that they are willing to pay more of their own currency for SGD. So say if there is a egg distributor in Singapore, all of his cost will be in SGD and if he was to export his products to Malaysia, we have to pay like double the price, don't you think their strong currency will hurt their export instead? So, they will probably not be able to export eggs if their cost structure is too high so they wouldn't. Instead, they will have to focus on industries that people are generally willing to pay even though it's for a high price. Or they will have to improve their productivity to a level that they are able to justify for their high prices.

And in any case, on your question on inflation. Although you may argue that if you were to convert the price of goods from Singapore back to Malaysia, it is more expensive than Malaysia and hence Sg has a higher inflation than Malaysia (prices more expensive) according to your logic but that is untrue. Because if you were to convert what a typical person working in Singapore earns back to Malaysia, they amount that they earn will be able to buy more relative to what a typical Malaysian earn. The best way to see who is in a better position is by looking at their purchasing power. No point if you were to earn a salary of say RM3k but a TV cost you RM2k wherelse in Sg, you earn SGD3k but a tv only cost you SGD1.5k. So, if you work in Malaysia will only be able to buy 1.5 times TV with your salary wherelse if you work in Sg, you will be able to afford 2 TV. Although the TV in Singapore after converting back to Malaysia is more expensive, you will be able to afford more TV's if you work in Singapore rather than in Malaysia.

Most of Malaysia's debt are also funded locally too, so shouldn't we also deserve the AAA rating too and going by your logic? And, it has an even lower debt in comparison in to Singapore, so shouldn't we be better than them?

This post has been edited by legiwei: Apr 1 2012, 08:00 PM

Perhaps you should read this.
http://www.indexmundi.com/malaysia/debt_external.html
http://www.indexmundi.com/singapore/debt_external.html

Furthermore, ratings on sovereign debt does not cover debt only if that's the case USA would be junk status. Just compare our GLCs Khazanah/PNB to Singapore's Temasek/GIC, and which one does better with taxpayers money? You tell me ....

Spot the difference:





Good on you if you've already spotted it.

Fiat is based on Faith.

Do you trust me? Give me all your gold and silver and I'll give you an equivalent amount in a piece of printed paper.

This post has been edited by pubmut: Apr 2 2012, 05:32 PM

Both Singapore and Malaysia have low external debt. External debt is the total public and private debt owing to foreign lenders, so don't assume that all the external debt is owed by the government.

For example, Australia has low public debt of 26% of GDP, but it has an extremely high external debt at more than 1.1 trillion US$. The typical Australian spends more than what he earns, so he has to borrow the difference from Australian banks, which source their funds from overseas lenders. Most Western countries are like that - huge external debt and some also have huge public debt as well. Many Asian countries used to be like that, but after the 1997 Asian Financial Crisis, most Asian countries are very carefull not to borrow too much from outside.

Malaysia's public debt is around 50% of GDP. Singapore's public debt is around 100% of GDP. But because both governments have low external debt, it is still ok.

Which GLC did better? Khazanah or Temasek. Read this article: Temasek Portfolio Lost $39.91 Billion

I read somewhere more than 95 % of money in circulation is digital while the balance is in notes & coins. So my question is who creates and controls the 95%+ money? Bank negara or the private banks.

The central bank of a country controls the money supply of its given country. For instance, The Federal Reserve is in charge of controlling the money supply in the States. When is prints more money, the currency depreciates. The Fed could choose to print money for many reasons. For instance, the Fed many decided to print more money to enable the currency to depreciate which in return results in not only a lower level of interest rates but the spending power of consumers would also increase tremendously as credit is easier to be obtained. Moreover, US exports would also increase as more foreign parties would be importing goods from the States due to the lower currency exchange.

On the other hand, the Fed could decrease the amount of money in circulation by various methods such as by increasing the SRR (Statutory Reserve Requirements), increasing interest rates ( loans become more expensive hence consumers would delay their purchases and would start saving more), and it could also sell various securities such as gov.bonds and T-bills.

So the choice of using contractionary monetary policy or expansionary monetary policy boils down to many factors such as the condition of the government, economy, current political situation etc.

Oh yeah and before i forget, in Malaysia its Bank Negara Malaysia (BNM) that controls the money supply in the economy.

Hope this answers your question. Do feel free to ask for further clarifications and i would try my best to answer your questions based on he knowledge that i have

so how about now? our money currency keep on lowering..

TL;DR

But happy4ever have probably the best explanation. Currency is just a way to store value. BNM is the monetary authority in Malaysia. So basically BNM create a finite amount of money, and put it into the system. BNM will keep some foreign currency & gold as reserves.

In reality what happens is just BNM will go to the FX market and buy some USD from banks, and then credit the bank's account (in BNM) with some MYR. The USD becomes our reserve. That MYR is really just a number (eg system says bank X have 100Mil in BNM.). If bank need hard cash they can ask from BNM (known as "currency in circulation"). This is what people say as "print money". It happens more often than you think, but BNM must control when to print and when to "destroy" (i.e. use USD to buy MYR back). If not our currency will be worthless.

So what happens right now is a series of chain event. When US decided to "print money" in 2008 (basically the Feds create USD to buy bond), people see USD will devalue, and move them to emerging market like Malaysia. So they sell USD and buy MYR. MYR value rises. Right now 2015, USD increases in interest rate, which means it's more attractive to hold USD. They then reverse the transaction. Plus oil price slump, plus 1mdb, end up everyone sell MYR to keep other currency. In order to handle such large transaction, BNM have to use their reserve to be the one "buying MYR and selling USD". But with limited reserve we can't keep holding USDMYR = 3.2000. That's why it slides..... rather drastically.

On the original question by TS: "How does Malaysia print their money?"

For clearer understanding, there are 2 types of money that can be created:
1) Base money (aka hard currency)
2) Fiat money

Base money is the actual amount of currency (money backed by real notes / coins etc.) plus the "cannot be lent out" reserves that banks must keep with the central bank.

Fiat money is "fictitious" money that only exists as digital accounting entries. It is created as a result of bank lending (you can read about it on the internet how lending creates money). Fiat money adds to the money supply without having any real physical currency.

When you say print money, usually, it means creation of new base money. It is achieved via a mix of (you guessed it) printing new currency and distribution to the wider economy via central bank lending to commercial banks or governments.

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All the other discussions here re. inflation, SG / Msia debt etc is irrelevant to your question.

back in late 60s and early 70s, Mr Lee is not in good terms with Tan Siew Seng.
Mr Lee proposed a peg systems that every dollar is pegged together with a basket of foreign currency.
every dollar you have in your country is fully backed by an equal value in foreign currency as far as i remember "Singapore Story". There is very little room for $$$ printing. Thus,
this will prevent country from over spending.
But Malaysia boleh need more $$$budget so that more highway can be built, buildings can be built, etc... can be build.


However, Mr Tan goes for the central bank approach. Once Mr Tan left the finance ministry, with the discpline and system in place, over spending is possible. the downfall begin.

Even if Mr Tan agree on the peg SGD, Brunei Dollar and Ringgit, eventually some other politician will disagree to it very quickly I think by 80s.

in the early years, the bank note was printed oversea. you can see the symbol Thomas De La Rue, US bankNote, Canadian Bank Notes, "Thomas De La Rue", "Bradbury Wilkinson & Co", "Harrison And Sons", "BA Banknote", "United States Banknote Co", "CanadianBanknote" or "Giesecke & Devrient".

After financial crisses 1999, the series by year 2000, mostly printed in Malaysia from what I know. better quality control.

Plz read

https://www.community-exchange.org/docs/Mod...eyMechanics.pdf