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Debt is created not money. You can’t pay the ferryman with an IOU from a bank.
by lesserknowndan 8y ago
Debt is created not money. You can’t pay the ferryman with an IOU from a bank.
- febeling 8y agoDebt is not money, but it has a flipside, the debt claim, which can be readily converted into money at a (central) bank. That's the fundemantal if somewhat hidden mechanism of our monetary system.
- goodcanadian 8y agoActually, that is pretty much exactly how it works. Banknotes (i.e. cash), are explicitly IOUs from a bank. Usually, it is a central bank, such as the Bank of England, but sometimes, it could be another bank. There are three retail banks in Scotland that are authorised to issue banknotes: https://en.m.wikipedia.org/wiki/Banknotes_of_Scotland https://en.m.wikipedia.org/wiki/Banknotes_of_Scotland