Governments allow platforms such as online casino sites to operate because they’re basically money-printing machines, which are then taxable and therefore generate the government some much-needed tax dollars. That’s just one way in which governments indirectly issue and regulate money supply, but it’s far from playing out on a micro-management scale…
Those who want to see how much money is “confiscated” or withdrawn should look at the annual increase in demand deposits and interbank overnight stays: this is the income of government-issued central bank departments, which create cashless money and leave it to the government to spend, because it is interest-free and there is no repayment along the way.
Seigniorage refers to the interest we earn on the production, distribution and replacement of banknotes. It is the positive return that is achieved by issuing banknotes and coins as money in circulation. The seigniorages derived from banknotes are indirect : they are the difference between the interest earned on securities purchased in exchange for banknotes and the costs of producing and distributing banknotes.
The key to take away is the difference between the face value of the money, about a quarter of a $0.25 coin, and the cost of making it. It is also called Seignorage, Seigneurage (Old French: Seigneuriage) or Lord Seignuer and mints money from the difference in value of money compared to the cost of producing and distributing it. SeignIORAGE reflects the increase in the value of a state asset (coin metal) by converting the nominal value of the coins into the higher cost of the coin metal.
During the Great Recession of 2008-2009, for example, central banks created huge amounts of money by purchasing government securities; they created money by trading in bonds that are not used in money as currency. As the economy grew, central banks lowered the money supply, then reversed course by selling government securities, reducing their reserves, and reducing supply. Once the currency has been collected and withdrawn from circulation it is never returned to the central bank and the issuer of the currency retains the seigniorage profit without having to buy or carry the currency at the face value.
By lending, they have created 95-97% of the money supply. Government-owned printers produced 85-150 billion banknotes, which were then produced and used by commercial printers when central banks needed more money than they could produce. It is what we use today for cash, which is new, because if they were on the gold standard, there would be money in circulation that was not backed by a national banking system (to be clear, it was a chartered banking system that did not exist).
We mentioned state banknotes in the South, private banknotes, deposits, Confederate treasury bills, and so on, and with that began a myriad of systems of different forms of money that began to grow. And the reason, and this is an interesting reason linked to what seigniorage is all about, is that the Confederate Congress has tried to reduce production and the amount of money in circulation.
Has that succeeded, given how the best USA online casino out of many proves to be very liquid even in the worst of financial times?