[mynameishere]

I always wondered if there was a way to effectively "burn" one's entire wealth, creating a small deflationary event that would increase the value of existing dollars. How could one do this? Donate to the Federal Reserve? Or would you literally have to cash everything out and burn it?

[hollerith]

According to my understanding, burning US dollar bills, donating to the Fed (if such a thing is possible) and donating to the Treasury are approximately equivalent in their effects.

What puts a lid on how much money the Fed creates is the desire to keep inflation to reasonable levels, preferably 2% per year. Your burning your cash allows the Fed to create more while adhering to their inflation target. Someone please correct me if I am wrong, but my understanding is that although the Fed decides how much money is created, the Fed is not allowed to keep or to spend newly-created money, but rather must give it to the Treasury (perhaps through some complicated or non-obvious mechanism) which makes it available for the government to spend.

[MobiusHorizons]

At least one way they do this is to buy treasury bonds. It is not clear to me what happens to the interest though .

[sdenton4]

In fact, dragons are important stabilizing influences in dungeon economics. The hoard of gold isn't inflationary until the adventurers liberate it and start buying wands and stuff.

[patwolf]

Reminds me of something I read years ago about how Ultima Online would create "gold sinks", super expensive items that served no purpose other than help remove gold from the economy and prevent inflation.

[ckemere]

https://en.m.wikipedia.org/wiki/The_KLF

[ChadNauseam]

Couldn't you just not spend or invest the money? I think putting it in a chest and burying it in an unmarked location would be equivalent to burning it.

[willcipriano]

A big part of modern monetary theory is taxing the newly printed money and putting it towards (wasteful) government programs to "burn it" in a sense.

Predictably, politicians who support MMT only did the printing part and skipped that bit once inflation started.

[bialpio]

That does not feel like burning the money, more like propping up the private sector (naively, government's deficit is going to be private sector's surplus if you don't actually reduce the amount of money in circulation).

[VirusNewbie]

How does that burn the money? If the government is spending the money, it's going to federal employees and purchasing good and services from the general economy.