Re: How do one dollar bills stay in the economy?
The Federal Reserve controls the supply of money. You deposit money into the bank, the bank loans out that money to a borrower. That borrower then buys something, and that new person deposits it in the bank, which then gets reloaned...etc. It's called the Multiple Deposit Expansion.
I don't know your financial situation, but you'll realize that the more money you have, the less you actually see it. It turns mainly into numbers on account with banks and other financial institutions. If you have $1,000,000, you aren't going to keep that money under your mattress - you'd be stupid if you did. So you deposit that $1 million into the bank, which then gets loaned out.
Banks also keep reserves so that if you wanted to withdraw money, the bank actually had some money to give you. When you keep an account on the bank, and you withdraw, you aren't getting the money back that you deposited. You are getting money back that someone else deposited that is sitting in the reserves while that depositer doesn't need it immediately.
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