Money is physical.
Just look into your wallet and see it.
Gold is not backed by anything other than itself, too.
True, but it is still money.The definition of fiat being: A formal authorization or proposition; a decree.
Correct, which is why it is a grave error to treat it as money, establish monetary policy as if it was money and to make cause/effect calculations of money as if it was money. You will get the wrong answers.Debt money is "money" which is in fact not money at all, but debt.
Correction.... bank to depositorIn fact if I understand correctly, it is not just that a bank creates a debt from the borrower to the bank, but also that the bank creates a debt from the bank to the borrower.
Other than depositor/borrower misnaming... it is not money, but a whole lot of promises to pay that must -one day- be reconciled with money.So the bank promises to pay the borrower what the borrower promises to pay back to the bank. In effect there is no money, just a whole load of promises to pay (I promise to pay the bearer on demand the sum of XXX)
As long as the borrower/depositors are matched, eventually everything works out.
If depositors withdraw or borrowers renege, serious issues occur.
No, we just have fiat money and a fractional reserve system.So if I understand correctly, we have a fiat-debt money system.
It is important to understand that it is not the fiat nature of modern money that is (necessarily) a problem.
It is the fractional reserve system that is the significant problem.
It is a fraudulent system based on deception of the bank upon the depositor. As will all immoral operations, it tends to end badly.
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