Concept

Money burning

Summary
Money burning or burning money is the purposeful act of destroying money. In the prototypical example, banknotes are destroyed by setting them on fire. Burning money decreases the wealth of the owner without directly enriching any particular party. It also reduces the money supply and (very slightly) slows down the inflation rate. Money is usually burned to communicate a message, either for artistic effect, as a form of protest, or as a signal. In some games, a player can sometimes benefit from the ability to burn money (battle of the sexes). The burning of money is illegal in some jurisdictions. Macroeconomic effect For the purposes of macroeconomics, burning money is equivalent to removing the money from circulation, and locking it away forever; the salient feature is that no one may ever use the money again. Burning money shrinks the money supply, and is therefore a special case of contractionary monetary policy that can be implemented by anyone. In the usual case, the
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