It’s undoubtedly depraved but admittedly brilliant. The debasement of currency caused by bank counterfeiting creates an endless need for more debt since everything just gets more expensive. The average person is constantly facing an uphill struggle of debt payments while their money becomes increasingly worthless. It’s a literal demonic hell loop.
And just enough of us can succeed and grab more cash than we need in order to keep the rest striving and hoping the system will reward their hard work.
This is the single best piece of writing I have ever read on this topic. Incredibly lucid, clear argument and comprehendible articulation of what would normally be heavy, wonkish information.
Wow. I knew our money was fake, but I thought it was "not based on a physical asset" fake, not "nonexistent according to its own conceptual framework" fake. That's... unsettling. And it also explains why the government is always proposing more loans as the solution to every humanitarian problem.
I'm now picturing the look my husband is going to give me and when he come in and I say, "The money is fake! The banks own everything!!!"
Next time a buddy wants to borrow a hundred bucks, take a piece of paper out of your pocket, write "Chris owes me a hundred dollars" on it, hand it to him, and tell him "I need that back next week along with ten dollars of interest." That's essentially what banks do when they make a loan. If it doesn't work for you, then no, you can't create new money out of thin air and make a loan. The money you loan out is money you worked to earn. It has opportunity cost, unlike the money banks loan out.
The only problem is the last paragraph, which fails to grasp that there is no such thing as a "store of value" that isn't debt in one form or another. Even cash is a debt, even gold is a debt: we are owed debt for something we did for society that we can claim back for something else we want. If society refuses to honor that debt, well, welcome to the jungle.
If you take the broadest possible definition of "debt", yes I understand your point. But the problem is focused on how specifically fiat currency debt is created and functions. I've written a much more detailed article on the specifically problematic aspects of debt-based currency and a potential solution if you're interested.
Nice explanation. If Treasury were the only source of currency, and the banks were not allowed to do fractional reserve lending, but instead were required to borrow money from the Treasury, mark up the interest and make the spread on a loan, then you would solve the M-1/2 problem.
That's the definition of the word fiat: an arbitrary decree. The fact that it's enforced by violence rather than by market choice is what makes it fiat.
It’s undoubtedly depraved but admittedly brilliant. The debasement of currency caused by bank counterfeiting creates an endless need for more debt since everything just gets more expensive. The average person is constantly facing an uphill struggle of debt payments while their money becomes increasingly worthless. It’s a literal demonic hell loop.
And just enough of us can succeed and grab more cash than we need in order to keep the rest striving and hoping the system will reward their hard work.
The current system only benefits those with the know how to game the system. Everyone else is playing the wrong game.
This is the single best piece of writing I have ever read on this topic. Incredibly lucid, clear argument and comprehendible articulation of what would normally be heavy, wonkish information.
Wow. I knew our money was fake, but I thought it was "not based on a physical asset" fake, not "nonexistent according to its own conceptual framework" fake. That's... unsettling. And it also explains why the government is always proposing more loans as the solution to every humanitarian problem.
I'm now picturing the look my husband is going to give me and when he come in and I say, "The money is fake! The banks own everything!!!"
Do individuals create in the same way if we lend money to another? Or is it only banks?
Short answer, it's only banks. I have a more in-depth explanation of how it works here.
https://www.f0xr.com/p/the-big-bank-lie
Next time a buddy wants to borrow a hundred bucks, take a piece of paper out of your pocket, write "Chris owes me a hundred dollars" on it, hand it to him, and tell him "I need that back next week along with ten dollars of interest." That's essentially what banks do when they make a loan. If it doesn't work for you, then no, you can't create new money out of thin air and make a loan. The money you loan out is money you worked to earn. It has opportunity cost, unlike the money banks loan out.
Excellent article again, f0xr!
Let us see if George @Selgin will weigh in on this article. He is perhaps the world's brightest and best in this neck of the economics woods.
The only problem is the last paragraph, which fails to grasp that there is no such thing as a "store of value" that isn't debt in one form or another. Even cash is a debt, even gold is a debt: we are owed debt for something we did for society that we can claim back for something else we want. If society refuses to honor that debt, well, welcome to the jungle.
If you take the broadest possible definition of "debt", yes I understand your point. But the problem is focused on how specifically fiat currency debt is created and functions. I've written a much more detailed article on the specifically problematic aspects of debt-based currency and a potential solution if you're interested.
https://www.f0xr.com/p/money-as-equity
Nice explanation. If Treasury were the only source of currency, and the banks were not allowed to do fractional reserve lending, but instead were required to borrow money from the Treasury, mark up the interest and make the spread on a loan, then you would solve the M-1/2 problem.
Yes.
But there's also the fact that you'll go to jail if you don't pay your taxes with it or accept payment with it if your business is big enough.
Is it really fiat when it's backed by very real force and the threat of imprisonment?
That's the definition of the word fiat: an arbitrary decree. The fact that it's enforced by violence rather than by market choice is what makes it fiat.