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No, he is right. What the OP meant by creating money out of nothing was fiat currency, which we do have now. If you decide to use a commodity also as money, t
by wallace_f 9y ago
No, he is right.
What the OP meant by creating money out of nothing was fiat currency, which we do have now.
If you decide to use a commodity also as money, that's fundamentally different, and econ textbooks can confirm this for you.
T-Bills are backed by fiat currency, not by a commodity.
The Fed, and also the banks through fractional reserve banking, genuinely do create "money out of nothing."
Check out A Monetary History of the US by Milton Friedman and Anna Schwarz. Here you will find a Nobel Prize winning econonist who wanted to dramatically reign in, or even end, the Fed and get rid of fractional reserve banking.
- alexasmyths 9y ago"T-Bills are backed by fiat currency, not by a commodity." What? No. TBills just bonds. They are 'backed' by the US Governments credibility to pay back the loan. USD is generally backed by an asset - fractional reserving not withstanding.
- wallace_f 9y agoThink about it again. You said T-Bills back currency today like gold used to, but that's not true. T-Bills are just notes to pay back more dollars. So it is dollars backed by dollars if you really are honest about your statement that USD is backed by an asset.