Fractional reserve lending versus.... what?

[Steven Douglas]

*cough*
At the poker table, you ARE playing with cash.
The avatar picture of me, that's about $75,000 of FRN sitting in front of me - and it is real (unlike your thin-air "money").

The chips simply make it easier to manage the pot (and, for novices, abstract them to believe they are not playing with real money), and for pros, something to do tricks with their fingers while waiting for the play.

But it is cash, Steven.

Ooohh, wonderful. So they're not a promise to pay but payment itself? Very convenient. No need for casinos to even have windows so that you can "cash out" then, huh? As good as gold and all that. Yeah, must be a special casino, because in Vegas nobody would let me get a burger or drinks using chips.

B-but...

What if someone robs the casino? A huge inside job, one that wipes it completely out. Authorities raid the place and shut it down, even while you are in the middle of intense heads-up play. No big tournament with FRN's piled up for dramatic effect. This time it's just high stakes in a back room, no hoopla and no big pretty stack of FRN's in sight. What then?

The bankrupt casino has none of that "other kind of cash" for you - that window is now permanently closed. But you weren't robbed, no siree. You have all those "cash" chips with you at the table, and you know how to idly shuffle that kind of "hard cash" with one hand. I know casinos in Vegas will often honor the chips of other casinos - if they have an agreement with them. But not bankrupt casinos. I'm pretty sure about that. Word spreads fast, and chips from bankrupt casinos are pretty much no good. So what then? Do you take that cash with you to Florida, buy a Snickers with them at a 7-11, gas up your tank, spend a few at Disneyworld, then plunk some of them down on a piece of land?

[Black Flag]

Ooohh, wonderful. So they're not a promise to pay but payment itself? Very convenient.

They are.
You can plunk them down, and buy a meal, a hotel room and pay your bar tab with them. You probably could buy some ladies for entertainment, but I didn't try that (married).

You can take the chips from one casino and spend them in another - no hassle at all

PS: We are talking about Vegas casinos here....

No need for casinos to even have windows so that you can "cash out" then, huh?

Just you won't accept Bolivars in the US, you have to convert to what the locals insist, or they won't trade.

No different here - outside of Vegas, a store owner couldn't identify it or if it was "real" like they can in Vegas due to familiarity (or the lack of it).
No big deal.
You probably wouldn't know a Rai stone even if it fell on you nor what a Renminbi looks like either (vs a fake)....

As good as gold and all that.

Much, much better than gold.

There would be no way you could buy a beer or lunch with a gold bar in Vegas without at least suffering a massive discount.

Yeah, must be a special casino, because in Vegas nobody would let me get a burger or drinks using chips.

You jest. It was no problem for me.

Maybe because my chips were "bigger" than yours.....

[Black Flag]

What if someone robs the casino? A huge inside job, one that wipes it completely out.

They have insurance for exactly that issue - their version of the FDIC.

I mean, did you believe they didn't????

It would be an unmitigated disaster for the entire gambling industry if a casino didn't honor chip to currency conversion - no one trust them again, and the whole industry would suffer a massive collapse.

No sir, they protect themselves from that very, very, very well. Their livelihood depends on it.

[Jamesiv1]

Becoming smarter than rocks is not all that hard. Murray N. Rothbard taught, "The Mystery of Banking."

Thanks for that (the book)

[Travlyr]

Murray N. Rothbard taught, "The Mystery of Banking."

You are welcome Jamesiv1.

In that book, Rothbard does a great job explaining how counterfeiters came to power. How the elite connived themselves into the privilege of effortlessly printing $1, $5, $10, $20, $50, $100, $10,000, & $100,000 notes without doing any work. It costs them the same to print a $1 as it does to print $100,000 while it takes the average joe two years of labor to earn $100,000. It is very clever. "Daddy Warbucks" called it "elastic" money. He loved the stuff. That is why the Queen doesn't blink an eye to spending $1billion on a wedding. It costs the same as a $1.