system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: How does the government know how much money to print?

So I understand that the government can't just keep printing money, but when they do, how do they know when to stop?
Thanks!
gpt
The following is for the US. Other countries are different...

Not all money in the economy is printed. How much money do you have? Is it all in twenties at the bank, or is it just a number the bank keeps track of for you? Banks decide how much currency they need to have on hand to service their customers' *currency* needs; they don't have exactly the amount of cash on hand that they have money on their books. Think about it, how much actual currency do you require? If you have $10K in your savings account, that's real money, whether it's in cash or not. A check for $10K is worth as much as one hundred $100 bills. The point is, money doesn't require currency; currency is just a super-convenient way of transferring money. People don't want to write a check to buy a candy bar.

The Federal Reserve (despite it's name, not a government agency) handles the management of the currency - replacing old currency and lending currency to banks. If you're a bank, you have a currency account with The Fed. The Fed gets the cash from The Treasury which actually prints it. The Fed figures out how much currency is required based on replacing old currency and the currency demand from the banks. So, ultimately the banks' customers decide how much currency is required.

TL;DR: the government doesn't actually decide how much money to print.