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> A bank doesn't give me an IOU when it gives me a loan; it gives me actual money Actual money is an IOU. From the gov't to the holder of the piece of paper. I

• pdonis 11y ago
  > It used to say so on every bill: "Will pay to the bearer on demand". Yes, "used to say", before the government decided it would no longer pay specie (gold) for currency notes. So money used to be an IOU of a sort, but it isn't now. (And even when specie payments were being made, there was never enough gold to back all the notes in circulation, so the IOUs weren't all valid anyway. They worked because people didn't treat them as IOUs; they treated them as a valuable commodity in their own right. So I don't think money ever really functioned as an IOU. Now, of course, we have no choice but to treat it as a valuable commodity in its own right.)